Economics for the IB Diploma: National Income Accounting

List of key economic terms and definitions related to national income accounting, GDP, GNI, and economic measurement.

Nominal GDP

The value of all finished goods and services produced within a country's borders in a specific time period, valued at current prices.

Real GDP

The value of all finished goods and services produced within a country's borders in a specific time period, adjusted for inflation and valued at constant prices.

Gross National Income (GNI)

The total income earned by a country's residents and businesses, including any income earned abroad, minus income earned by foreign residents and businesses.

GDP deflator

A measure of the level of prices of all new, domestically produced, final goods and services in an economy.

Expenditure approach

A method to calculate GDP by adding all expenditures made in an economy, including consumption, investment, government spending, and net exports (exports minus imports).

Net income from abroad

The difference between income earned by residents from abroad and income earned by foreigners from domestic sources.

Base year

The year chosen as a point of reference for measuring real GDP in terms of constant prices.

Consumer spending (C)

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

Investment spending (I)

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

Government spending (G)

The total expenditure by the government on goods and services.

Exports (X)

Goods and services produced domestically and sold to other countries.

Imports (M)

Goods and services produced in other countries and purchased by domestic consumers.

Price index

A measure that examines the weighted average of prices of a basket of consumer goods and services, with the prices in a base year serving as a reference.