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What does GDP stand for?
Gross Domestic Product
What is GDP?
The market value of all final goods and services produced within a country in a given year.
What does GDP measure?
Total spending, output, and income in an economy.
What are the two types of GDP?
Nominal GDP and Real GDP.
What does Nominal GDP measure?
GDP measured in today’s prices, including inflation effects.
What is Real GDP?
GDP measured in constant prices, excluding the effects of price changes.
What does the circular flow diagram represent?
A model that illustrates how households and businesses are linked in an economy.
What are the components of GDP as total spending?
Consumption (C), Investment (I), Government purchases (G), Net exports (NX).
What is the interdependence principle in macroeconomics?
Your choices depend on various interconnected factors within the economy.
Why doesn't GDP include resale of already purchased goods?
Because it would merely change the ownership of goods that have already been counted in GDP.
What are some limitations of GDP?
Excludes nonmarket activities, shadow economy, environmental degradation, leisure, and income distribution.
Why is GDP considered a measure of economic activity?
It quantifies the overall economic output and spending within a country.
What is the Rule of 70?
A method to estimate the number of years for an amount to double by dividing 70 by the annual growth rate.
What is the total income perspective on GDP?
A measure of GDP that adds up all dollar amounts earned as wages and profits.
In what year was the GDP of Canada $2.5 trillion?
What is included in GDP?
Only final goods and services produced within a country in a given year.
What does the spending equation for GDP tell us?
It summarizes the types of spending that define all goods and services produced in the economy.
What does GDP ignore regarding distribution?
It does not account for how income is distributed among the population.
How does GDP reflect national well-being?
While GDP has limitations, it correlates with factors like life satisfaction and living standards.
What can affect the comparison of GDP over time?
Changes in prices; hence the need for Real GDP to accommodate that.
What is total output perspective of GDP?
A measure of GDP that focuses on what is being produced and by whom, emphasizing production contributions.
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