AP Macro GDP key terms

What does GDP stand for?

Gross Domestic Product, the total value of all goods and services produced in a country.

Difference between nominal GDP and real GDP?

Nominal GDP is measured in current dollars; real GDP is adjusted for inflation.

Fill in the blank: GDP includes _____ production.

final

True or false: GDP measures the economic performance of households.

False, because it measures the total output of all sectors, not just households.

What is the GDP deflator?

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

Which component of GDP does consumer spending fall under?

Consumption (C)

Question: What does the expenditure approach calculate?

GDP by adding total spending on final goods and services.

True or false: Net exports are exports minus imports.

True, because it measures the trade balance contributing to GDP.

What does GNP stand for?

Gross National Product, which includes the value of all goods and services produced by a country's residents.

Difference between GDP and GNP?

GDP measures domestic production; GNP includes income from abroad.

What is a business cycle?

Fluctuations in economic activity, typically marked by periods of expansion and contraction.

Question: How is GDP per capita calculated?

By dividing the GDP by the population of the country.

True or false: GDP accounts for the distribution of income.

False, because it does not reflect how income is divided among the population.

What is the formula for GDP using the expenditure approach?

GDP = C + I + G + (X - M), where X = exports, M = imports.

Which component of GDP is government spending?

Government Purchases (G), which includes spending on goods and services.

Fill in the blank: The GDP growth rate is calculated as the percentage change in _____ over time.

GDP

What is an economic indicator?

Statistics that provide information about the economic performance and health of a country.

True or false: GDP includes all economic activities.

False, because it excludes informal and illegal economic activities.

What is a recession?

A significant decline in economic activity across the economy, lasting more than two consecutive quarters.