- Gross Domestic Product (GDP)
- The total market value of all final goods and services produced within a country's borders during a specific period, usually a year or quarter.
- Final Goods and Services
- Finished products sold to end users, counted in GDP to avoid double-counting the value of intermediate inputs.
- Nominal GDP
- GDP measured using current-year prices, so changes can reflect both output growth and price inflation.
- Real GDP
- GDP measured using constant base-year prices, allowing economists to compare actual production without the distortion of price changes.
- Inflation
- A general increase in prices that reduces purchasing power and can make nominal GDP appear larger even when output changes little.
- Base Year
- The reference year whose prices are used to calculate real GDP across multiple periods.
- Real GDP Per Capita
- Real GDP divided by population, commonly used to compare average material living standards over time or across countries.
- Living Standards
- The material conditions people experience, often approximated by output or income per person but shaped by many non-GDP factors as well.
- Circular-Flow Diagram
- A model showing how money, goods, services, and factors of production move between households, businesses, and markets.
- Expenditure Approach
- A method of measuring GDP by adding spending on final goods and services by households, businesses, government, and foreign buyers net of imports.
- Income Approach
- A method of measuring GDP by adding income earned from production, including wages, rent, interest, and profits.
- Factors of Production
- The productive resources used to make goods and services, including labor, land, capital, and entrepreneurship.
- Environmental Damage
- Harm to natural systems such as pollution, resource depletion, or ecosystem loss that GDP often fails to subtract from measured output.
- Income Distribution
- The way income is shared across people or households in an economy, which GDP per capita can hide because it is an average.
- Poverty
- A condition in which people lack enough income or resources to meet basic needs, even in countries with high average output.
- Non-Market Work
- Valuable work that is not bought or sold in markets, such as caregiving, household labor, and volunteer work, and is usually omitted from GDP.
- Well-Being
- A broader measure of quality of life that can include health, education, safety, freedom, leisure, environmental quality, and social connection.
- Potential GDP
- An economy's long-run productive capacity when labor, capital, and other resources are used sustainably and effectively.
- Labor Force
- The people who are working or actively seeking work, including the skills, education, health, and training they bring to production.
- Capital Goods
- Tools, machines, factories, infrastructure, and equipment used to produce other goods and services.
- Natural Resources
- Inputs from nature, such as land, minerals, energy, water, and climate conditions, that can affect productive capacity.
- Technology
- Knowledge, methods, and tools that allow the same inputs to produce more output or higher-quality goods and services.
- Institutions
- Rules, laws, property rights, norms, and organizations that shape incentives and help an economy function.
- Productivity
- The amount of output produced per unit of input, such as output per worker or per hour worked.
