Measuring GDP Flashcards

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What is GDP?

GDP stands for Gross Domestic Product. It is the total value of goods and services made in a country in a set time, usually a year.

What does “domestic” in GDP mean?

It means inside the country’s borders, no matter who owns the firms.

Who measures GDP in the UK?

The Office for National Statistics (ONS).

How often is UK GDP reported?

Every quarter (every three months) and every year.

What are the three ways to measure GDP?

Output method, income method, and expenditure method.

What are the parts of GDP in the expenditure method?

Consumption, investment, government spending, and net exports (exports minus imports).

What incomes are counted in the income method?

Wages, rent, interest, and profit.

What is “value added” in the output method?

It is the value a firm adds to its inputs. It is used to avoid counting the same output twice.

Why should the three methods give the same GDP in theory?

Because every pound spent becomes someone’s income and equals the value of output.

Are second-hand sales included in GDP?

No. Only new production is counted in GDP.

Are transfer payments like benefits included in GDP?

No. They are not payment for goods or services.

What is GDP per capita and how do you find it?

It is GDP per person. Divide total GDP by the population.