GDP Flashcards
(11 cards)
Definition
The total value of goods and services produced in an economy in a given time period.
Expenditure
Changes in the value of stocks
C + G +I + X - M
Factor incomes
Wages and salaries
Profits of private and public sector businesses
Rental income from ownership of land
Value of output
Value added from each of the main sectors:
- Primary (e.g. farming, forestry, mining)
- Secondary (construction and manufacturing)
Tertiary (e.g. tourism and healthcare)
Quaternary (e.g. business consultancy)
Value GDP
Measures the monetary value of goods and services
Volume GDP
Measures the physical quantity of goods and services
Nominal GDP
Not inflation adjusted. Expressed as current prices.
Real GDP
Adjusted for the effects of price inflation. Expressed as constant prices.
Real value in current year = nominal value in current year/price index in current year x 100
GDP per capita
Measures the average economic output per person in a country.
Per capita GDP = Total GDP/Population
Advantages of per capital GDP
- Helps to understand the average standard of living in a certain nation
- Used to compare the economic performance of different countries while considering population sizes
Disadvantages of per capita GDP
- Ignores inequality
- Looks at gross income rather than Yd
Median disposable income may be better for measuring living standards - Doesn’t take into account shadow economy or unpaid work (e.g. voluntary work)