1. Gross Domestic Product GDP

2. GDP Gross Domestic Product
Dollar value of all goods and services produced within a country’s border in a given year

3. GDP Nominal GDP – GDP measured in current prices Real GDP
– GDP expressed in constant unchanging prices
-has been adjusted for inflation (general increase in prices)

4. Consumer Price Index CPI – helps measure inflation
Uses a market basket of typical goods/services for an urban household, to compare prices over time
Market basket includes food, rent, clothing, transportation, medical care, entertainment, tuition and more
If prices have gone up according to CPI then inflation has increased

5. Limitations of GDP Non-market activities
– doesn’t measure services you perform for yourself (mowing the lawn, stay at home mom)
2. Underground activities
– Black market
- Informal transactions
3. Quality of life

6. Formulas nominal GDP Real GDP = x 100 CPI Economic Growth Rate
Real GDP Yr. 2 – Real GDP Yr. 1
x100
Real GDP Yr. 1