Economics for the IB Diploma: National Income Accounting

Flashcards covering key vocabulary related to national income accounting in economics.

Nominal GDP

The total value of all goods and services produced in a country valued at current prices.

Real GDP

The total value of all goods and services produced in a country valued at constant prices, using a base year.

GNI

Gross National Income; calculated as GDP plus net income from abroad.

Net Income from Abroad

Income earned by residents from investments abroad minus income earned by foreigners from investments in the domestic economy.

GDP Deflator

A measure for converting nominal GDP into real GDP, reflecting changes in price level.

Expenditure Approach

A method for calculating GDP by adding up consumption, investment, government spending, and net exports (exports minus imports).

Base Year

A year used as a standard for comparison when calculating real GDP.

Consumer Spending (C)

The total amount of money spent by households on goods and services.

Investment Spending (I)

The total expenditure on capital goods that will be used for future production.

Government Spending (G)

Total government expenditures on goods and services.

Exports Minus Imports (X-M)

The net spending by the country, where exports are sales to other countries and imports are purchases from other countries.

GDP Calculation Formula

GDP = C + I + G + (X - M), where C is consumption, I is investment, G is government spending, and (X-M) is net exports.

Per Capita GDP

GDP divided by the population, representing the average economic output per person.

Price Index

A measure that examines the weighted average of prices of a basket of consumer goods and services.