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ECONOMICS
Chapter 12
GDP and Economic Growth
Gross Domestic Product
 Nominal GDP is the
dollar value of all final
goods and services
produced within a
country’s borders in one
year
 Real GDP is GDP
without the effects of
inflation
 Per Capita GDP is GDP
per person
 Nominal GDP x 100
Index Number
 Real GDP
Population
Limitations of GDP
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Volunteer or Unpaid Activities don’t count
Illegal Activities don’t count
Negative Externalities don’t count
Quality of Life not measured by GDP
Leisure time not counted
Business Cycle
 Expansion –
increase in real GDP
 Peak – when real
GDP stops rising
 Contraction –
decrease in real
GDP
 Trough – when real
GDP stops falling
Definitions
 Recession – when real GDP falls for six
consecutive months
 Inflation – when the purchasing power of
a dollar decreases
Economic Indicators
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Stock Market
Interest Rates
Inflation Rates
Unemployment Rates
Sales
Number of New Projects