Chapter 2: Measuring the Economy

The total value of all goods and services produced in a country over a specific time period.

Total spending by households, businesses, and government on goods and services.

Periods of falling output in the economy, often leading to decreased expenditures.

GDP is made up of consumption, investment, government spending, and net exports.

Total spending by households on goods and services, including durable and non-durable goods.

Spending by firms and government on capital goods, residential buildings, and inventory changes.

Purchases of goods and services by the government, including consumption and investment.

The value of a country's exports minus its imports, influencing overall GDP.

GDP calculated by summing the production values of various industries to avoid double counting.

The total income earned by factors of production, including wages, profits, and taxes.

The total spending on final goods and services by consumers, businesses, and the government.

A model illustrating the continuous movement of money, goods, and services in the economy.

The government acts as a producer, using tax revenues to finance public services.

The difference between a country's exports and imports; it contributes to GDP.

The inclusion of international trade in GDP measurements, affecting domestic consumption and production.

The additional worth created by processes in various industries that contribute to GDP.

The process of comparing the GDP of different countries using US dollars.

A method to compare the value of GDP by considering the cost of goods and services in each country.

The percentage change in GDP from one period to the next, indicating economic performance.

Determining GDP growth using the formula: (Real GDP_current - Real GDP_previous) / Real GDP_previous x 100.

Comparative analysis of GDP to understand living standards across different nations.

Factors that influence why GDP increases in some countries but not others.

GDP remained constant until the 19th century, when significant divergence began.

GDP adjusted for inflation, providing a more accurate economic measure over time.

The percentage increase in a country's real GDP over a year.

UK's real annual GDP in 2024, estimated at 1600 billion pounds.

Japan's real annual GDP in 2024, estimated at 240 trillion yen.

Comparing GDP growth rates of different countries, such as UK and Japan.

A period of rapid industrial and technological changes transforming economies.

Advancements that enhance production efficiency and increase living standards.

Economic improvements often follow countries gaining independence from colonial rule.

A metaphor for countries experiencing sudden economic growth after stagnation.

A period of major industrialization that transformed economies from agrarian to industrial.

The ability of a country to produce a good at a lower opportunity cost than another country.

An increase in the production of goods and services in an economy over time.

Negative effects of rapid economic expansion on the environment, like pollution and biodiversity loss.

Advancements in technology that have radically changed production methods and societal organization.

Average income of a country's citizens, calculated by GDP divided by population.

A measure of wealth, comfort, and access to necessities in a country.

The total economic output of a country using current prices, without adjusting for inflation.

The impact of price changes on the measurement of economic output.

Evaluating living standards by considering GDP per capita across time and countries.

The total amount of goods and services produced, crucial for assessing economic growth.

To accurately assess economic progress, it's important to ignore changes in the price levels.