AP Macroeconomics Module 11: Interpreting Real Gross Domestic Product

What is the most important use of GDP?

It allows us to measure of the size of the economy, providing us a scale against which to compare the economic performance of other year or other countries

GDP per capita

GDP divided by the size of the population; equivalent to the average GDP per person

aggregate output

The total quantity of final goods and services produced within an economy This is measured to get an accurate estimation of GDP not affected by inflation

Real GDP

The total value of all final goods and services produced in the economy during a given year, calculated using the prices of a selected base year in order to remove the effects of price changes

Nominal GDP

The total value of all final goods and services produced in the economy during a given year, calculated with the prices current in the year in which the output is produced.