Macroeconomics

GDP (Gross Domestic Product) is the total monetary value of all final goods and services produced within a country's borders in a specific time period.

The three approaches are the expenditure approach (C + I + G + NX), the income approach (sum of all incomes earned), and the production/output approach (sum of value added at each stage).

GDP = C + I + G + (X − M), where C = consumption, I = investment, G = government spending, X = exports, M = imports.

Nominal GDP is measured at current market prices, while real GDP is adjusted for inflation using a base year's price level, reflecting true output changes.

The GDP deflator is a price index calculated as (Nominal GDP / Real GDP) × 100. It measures the overall level of prices for all goods and services included in GDP.

GDP per capita is GDP divided by total population. It provides a rough measure of average economic output per person and is used to compare living standards across countries.

GNP (Gross National Product) measures output produced by a country's residents regardless of location, while GDP measures output within a country's borders regardless of who produces it.

Inflation is a sustained increase in the general price level of goods and services in an economy over a period of time, reducing the purchasing power of money.

The CPI measures the average change over time in the prices paid by urban consumers for a fixed basket of consumer goods and services.

CPI measures prices of a fixed basket of consumer goods only, while the GDP deflator covers all domestically produced goods and services and updates its basket automatically.

Demand-pull inflation occurs when aggregate demand exceeds aggregate supply, pulling prices upward. It is often described as "too much money chasing too few goods."

Cost-push inflation occurs when rising production costs (e.g., wages, raw materials) cause producers to raise prices, pushing the overall price level up even without excess demand.