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Economic Terms

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Gross Domestic Product

The total market value of all the final goods and services produced in an economy over a given period of time. This can be determine by measuring the expenditure, income or output of the economy.

Below is a diagram to illustrate the three methods of measuring the level of economic activity via GDP. All three of these methods should lead the same answer in a closed economy.

Gross Domestic Product per capita

GDP divided by the population of an economy. It is a useful way of measuring economic progress i.e. GDP growth may not be perceived as successful if GDP per capita has declined.

Below is a graph to show real GDP per capita changes over the past 30 years and as this is one of the main measures of the standard of living for a country, because this has been increasing over the past 30 years then living standards have been increasing as well.

Gross National Product

Is the final value of all the goods and services produced using labour and property owned by the inhabitants of an economy.

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