GROSS DOMESTIC PRODUCT

​A change in GDP over time illustrates growth

For economic growth to occur, it should change with population

Real GDP per capita measures such growth and the standard of living

​•Most important measure of wealth

•GDP is the dollar value of all FINAL goods and services produced within a country’s borders in a given year.

oFinal goods are those sold to consumers

oIntermediate goods are those used in the production process (not calculated)

​Nominal GDP is GDP measured in current prices

oDoes not always measure an increase in output

To measure growth from year to year, economists measure Real GDP

oReal GDP is measured by calculating GDP with constant price (accounts for inflation).