Macroeconomics: GDP and Related Concepts

This set of flashcards covers key vocabulary and concepts related to Gross Domestic Product (GDP) and macroeconomic principles.

Gross Domestic Product (GDP)

The market value of the final goods and services produced within the borders of a country during a particular time period.

Circular Flow Diagram

A model that illustrates how money and resources flow through the economy among households and firms.

Production Approach

One of the methods to calculate GDP by summing the value added at each stage of production.

Expenditure Approach

A method to calculate GDP by summing total spending on the economy's final goods and services.

Income Approach

A method to calculate GDP by summing all incomes earned by factors of production in the economy.

Nominal GDP

The total value of production using current market prices to determine the value of each unit produced.

Real GDP

The total value of production using market prices from a specific base year to determine the value of each unit produced.

Consumption (C)

Market value of all consumption goods and services purchased by domestic households.

Investment (I)

Market value of new physical capital purchases by households and firms, including residential housing and business inventories.

Government Spending (G)

Market value of government purchases, excluding transfer payments like Social Security.

Exports (X)

Market value of domestically produced goods and services sold to foreigners.

Imports (M)

Market value of foreign-produced goods and services purchased by domestic buyers.

Factors of Production

Inputs used in the production of goods and services; typically includes labor, capital, land, and entrepreneurship.

Capital Depreciation

The loss of value to physical capital over time.

Externalities/Spillovers

Activities that directly affect other people not engaged in that activity, often not reflected in GDP.

Income Inequality

The uneven distribution of income within a population, which GDP measures without considering its fairness.

GDP per Capita

A measure of a country's economic output that accounts for its number of people, often used to gauge the average standard of living.