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Social Sci LibreTexts

Key Concepts

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  • Macroeconomics studies the whole national economy as a system. It examines expenditure decisions by households, businesses, and governments, and the total flows of goods and services produced and incomes earned.

    Real Gross Domestic Product (GDP), prices and inflation rates, and employment and unemployment rates are indicators of macroeconomic activity and performance.

    Fluctuations in the growth rate of real GDP, in inflation rates, and in unemployment rates are important aspects of recent economic performance in Canada.

    The expenditures by households, production of goods and services by business, and the incomes that result are illustrated by the circular flow of real resources and money payments.

    The National Accounts provide a framework for the measurement of the output of the economy and the incomes earned in the economy.

    Nominal GDP measures the output of final goods and services at market prices in the economy, and the money incomes earned by the factors of production.

    Real GDP measures the output of final goods and services produced, and incomes earned at constant prices.

    The GDP deflator is a measure of the price level for all final goods and services in the economy.

    Real GDP and per capita real GDP are crude measures of national and individual welfare. They ignore non-market activities, the composition of output, and the distribution of income among industries and households.