Terms and Formulas
Terms
Base year
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The year from which constant prices or quantities are taken in calculations of
such indices as real GDP and CPI.
Bureau of Labor Statistics
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The government organization responsible for regularly gathering data about the economic
status of the population.
Consumer price index (CPI)
-
A cost of living index that measures the total cost of goods and services
purchased by a typical consumer within a country.
Fixed basket
-
A set group of goods and services whose quantities do not change over time.
This is used, for instance, in the calculation of the CPI.
Gross domestic product (GDP)
-
The sum of the market values of all final goods and services produced within a
particular country during a period of time.
Gross domestic product deflator (GDP deflator)
-
The ratio of nominal GDP to real GDP for a given year minus 1. The GDP
deflator shows how much of the change in the GDP from a base year is reliant on
changes in the price level.
Gross domestic product per capita (GDP per capita)
-
GDP divided by the number of people in the population. This
measure
describes what portion of the GDP an average individual gets.
Gross national product (GNP)
-
An alternative measure of economic activity to GDP. GNP is the
sum of the
market values of all goods and services produced by the citizens of a country
regardless of their physical location.
Nominal gross domestic product (nominal GDP)
-
The sum value of goods and services produced in a country and valued at current
prices.
Real gross domestic product (real GDP)
-
The sum value of goods and services produced in a country and valued at constant
prices, calibrated from some base year. Real GDP frees year-to-year
comparisons of output from the effects of changes in the price level.
Formulae
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Gross Domestic Product
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GDP = [(quantity of A X price of A) + (quantity of B X price of B) + ... +
(quantity of N X price of N)] for every good and service produced within the
country
GDP = (national income) = Y = (C + I + G + NX)
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GDP Growth Rate
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GDP growth rate = [(GDP for year N) / (GDP for year N-1)] - 1
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GDP Deflator
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GDP deflator = [(nominal GDP) / (real GDP)] - 1
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GDP Per Capita
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GDP per capita = (GDP) / (population)
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