The most widely used measure of a nation's economic performance.
GDP is the market value of all final goods and services produced within a nation's geographical borders during a period of time regardless of who owns the factors of production.
Second-hand, financial transactions and intermediate products are not counted.
Gross National Product (GNP) aka Gross National Income (GNI)
The income accruing to a country's residents from the production of all final goods and services during a period of time, no matter where in the world the goods and services are produced.
Circular Flow Model
A diagram representing the flow of products and resources between businesses and households in exchange for money payments.
Measured in units per time.
Quantities that exist at a given point in time measured in dollars.
Sums the four major spending components of GDP
GDP = C + I + G + (X - M)
X = Foreign spending for domestic exports
M = Domestic spending for foreign exports
Net Domestic Product (NDP)
NDP = GPD - Depreciation
Net National Product (NNP)
NNP = NDP - Net income paid overseas
The total net income from production accruing to a country's residents.
NS = Total national investment + Current account balance
The total of the income accruing to its residents less its consumption.
The total of its spending on its current stock of physical capital by both the private sector and the government.
Current Account Balance
The total of its exports of goods and services less its imports of goods and services and less its net income (dividends and interest payments), and net transfers (foreign aid and pensions) payable overseas.
Net Foreign Investment
Measures the increase or decrease in the total of a country's net foreign debt.
Measures all final goods and services produced in a given period, valued at the prices existing during the time period of production.
Real GPD (Constant Price GPD)
Measures all final goods and services produced in a given period, valued at the prices existing in a base or reference year.
GPD Implicit Price Deflator
A broad price index implicit in the conversion of nominal GPD to real GPD.
Is a measure of changes in the price of consumers goods, business investment, government spending, exports and imports.
Recurrent rises and falls in real GPD over a period of years. They vary greatly in duration and intensity.
The point at which the economy moves from expansion or upswing in its business cycle into a period of downswing or recession.
The turning point in national output between recession and recovery.
Officially - At least two consecutive quarters of real GDP decline.
Traditionally - At least six months of contraction in a range of macroeconomic measures of output, income, sales and employment.
The upturn in the business cycle during which real GPD begins to rise again and eventually becomes more representative of normal economic growth.
Measured by the annual percentage change in real GPD in a nation.
Long-term annual average growth rate in Australia is around 3.5 to 4 percent.
Variables that change direction before the economy shifts from one business cycle to another.
Variables that change direction after a phase change in the economy has occurred, thereby confirming it.
Variables that change the same time as the economy shifts from one business cycle to another.
The difference between full employment (potential) real GDP and actual real GDP.
Measures the loss of output due to cyclic unemployment.
Solow Growth Model
Explains how consumption, saving, the capital stock, the labour force and technological change combine in the longer term to determine a nation's economic growth.
Technological change is assumed to be exogenous.
Endogenous Growth Models
Incorporate technological change that is endogenous to the economic system.
They represent a richer understanding of the way in which technological progress happens and its role in the economic system.
Exogenous Technological Progress
Technological progress that occurs independent (outside) of the economic growth process.