Terms Commonly Used In Economics

Base year  -  The year from which constant prices or quantities are taken in calculations of such indices as real GDP and CPI.

Bureau of Labor Statistics  -  The government organization responsible for regularly gathering data about the economic status of the population.

Consumer price index (CPI)  -  A cost of living index that measures the total cost of goods and services purchased by a typical consumer within a country.

Fixed basket  -  A set group of goods and services whose quantities do not change over time. This is used, for instance, in the calculation of the CPI.

Gross domestic product (GDP)  -  The sum of the market values of all final goods and services produced within a particular country during a period of time.

Gross domestic product deflator (GDP deflator)  -  The ratio of nominal GDP to real GDP for a given year minus 1. The GDP deflator shows how much of the change in the GDP from a base year is reliant on changes in the price level.

Gross domestic product per capita (GDP per capita)  -  GDP divided by the number of people in the population. This measure describes what portion of the GDP an average individual gets.

Gross national product (GNP)  -  An alternative measure of economic activity to GDP. GNP is the sum of the market values of all goods and services produced by the citizens of a country regardless of their physical location.

Nominal gross domestic product (nominal GDP)  -  The sum value of goods and services produced in a country and valued at current prices.

Real gross domestic product (real GDP)  -  The sum value of goods and services produced in a country and valued at constant prices, calibrated from some base year. Real GDP frees year-to-year comparisons of output from the effects of changes in the price level.