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Economic Definitions Worksheet

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Economic Definitions Worksheet 1. Gross Doemstic Product (GDP)

GDP is a flow concept that measures final aggregate output per year for a given country. Even though GDP is reported quarterly; it is annualized, meaning it is reported as an estimate for the entire year. Final production includes the value of all goods and services produced by all companies withing that given country.

2. Real GDP

Real GDP is the GDP adjusted for price changes caused by inflation or deflation. Because of inflation, GDP increases do not accurately reflect the true growth in a countries economy, Real GDP represents the GDP with the inflation rate taken into account.

3. Nominal GDP

Nominal GDP is the market value of all final goods and services produced by a country, based on goods and services produced by a country, at their respective prices, unaccounted for inflation.

4. Unemployment Rate

The unemployment rate is a measure of a countries unemployment and is calculated as a percentage by dividing the number of unemployed workers by all workers currently in the labor force. It is important to remember that people outside of the labor force are not included. When an economy reaches recession, usually the unemployment rate rises along with it.

5. Inflation Rate

The Inflation rate is the rate that prices of goods and services increase and buying power decreases. The inflation rate represents the annualized percentage change on general prices.

6. Fiscal Policy

Fiscal policy is a country’s plan administered by it’s government, to adjust spending levels and tax rates to influence it’s economy. The goal is to help the country’s economy to grow and avoid poverty.

7. Monetary Policy

Monetary policy is a central bank plan

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