GDP BASICS
What does GDP stand for?
Gross Domestic Product
What does an increase in GDP per capita indicate?
Economic growth.
What is the labor force?
All people over age 16 who are working or actively seeking work.
What is productivity?
The amount of output produced per unit of input, such as per worker.
What is a durable good?
A good that lasts for a long time, such as a car or refrigerator.
GDP is the total value of all______ and _____ produced in a country in one year.
Good and Services
How is GDP per capita calculated?
GDP divided by the total population.
What does the unemployment rate measure?
The percentage of people in the labor force who are not working but are looking for work.
Name one factor that can increase worker productivity
Better technology, worker training, improved management, or capital resources.
What are retail sales, and why are they important?
Retail sales are the sales of goods and services to consumers, and they are an indicator of economic growth
Name one of the four components of GDP.
Consumer spending, business spending, government spending, or net exports.
If GDP stays the same but the population increases, what happens to GDP per capita?
It decreases.
What is the main cause of unemployment?
Reduced demand for goods and services
If wages increase faster than productivity, what happens to the cost of goods?
The cost of goods increases, leading to inflation.
What is meant by net exports in the context of GDP?
The value of a country’s exports minus the value of its imports
What is the difference between final goods and intermediate goods?
Final goods are finished products sold to consumers, while intermediate goods are used to product final goods.
What is one factor that can lead to economic growth?
Increased productivity, technology, investment, or higher consumer spending.
How does an increase in employment affect GDP?
It increases GDP by contributing to more production of goods and services.
How does specialization of labor improve productivity?
Workers become more efficient by focusing on a specific task.
How does government spending contribute to GDP?
Government spending on public goods and services, such as roads and education, increases economic activity
Why is GDP used as a measure of a country’s economic health?
It reflects the total economic activity and the ability of a country to produce goods and services.
What is the primary difference between nominal GDP and real GDP?
Nominal GDP is measured in current prices, while real GDP is adjusted for inflation.
What is frictional unemployment?
Unemployment that occurs when people are temporarily between jobs or entering the workforce.
What is the impact of improved productivity on the standard of living?
It raises the standard of living by increasing the production of goods and services.
Why are home-based activities, like cutting your own lawn, not included in GDP?
GDP only counts market transactions for final goods and services, not personal activities.