Measuring Domestic Output and National Income

These flashcards cover key concepts regarding the measurement of domestic output and national income, based on the lecture notes.

Gross Domestic Product (GDP)

Measure of aggregate output of a country.

Expenditures Approach

Counts the sum of money spent on buying final goods and services.

Income Approach

Counts the income derived from production, including wages, rents, and profits.

Nominal GDP

GDP measured at current market prices without adjustment for inflation.

Real GDP

GDP adjusted for changes in price or inflation over time.

National Income Accounting

System that measures the overall performance of an economy.

Personal Consumption Expenditures (C)

The total amount spent by households on goods and services.

Gross Private Domestic Investment (Ig)

Investment in machinery, equipment, residential construction, and research.

Net Exports (Xn)

Calculated as exports minus imports.

Disposable Income (DI)

Income available to households after taxes and necessary spending.

Statistical Discrepancy

Adjustments made to account for variations in national income data.

Consumption of Fixed Capital

Depreciation, or the amount of capital that is consumed in producing goods.

Transfer Payments

Payments made by the government to individuals without any service or goods being received in return.

Underground Economy

Economic activity that is not reported or monitored by the government.

GDP Price Index

A measure used to adjust nominal GDP to calculate real GDP.

Market Value

The total value of a good or service as determined by supply and demand.

Financial Transactions

Exchanges that do not contribute to the production of goods and services, like sales of stocks.

Intermediate Goods

Products used to produce final goods and services, which are not counted in GDP.

Net Domestic Product (NDP)

GDP minus depreciation.

National Income (NI)

Total income earned by a nation's residents in the production of goods and services.