Chapter 19
Measuring Output and Income
By Boundless
![Thumbnail](../../../../../figures.boundless-cdn.com/20490/square/cular-flow-of-goods-income.jpg)
Gross domestic product is the market value of all final goods and services produced within the national borders of a country for a given period of time.
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GDP is a measure of national income and output that can be used as a comparison tool.
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In economics, the "circular flow" diagram is a simple explanatory tool of how the major elements in an economy interact with one another.
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GDP is the sum of Consumption (C), Investment (I), Government Spending (G) and Net Exports (X – M): Y = C + I + G + (X - M).
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GDP can be calculated through the expenditures, income, or output approach.
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The income approach evaluates GDP from the perspective of the final income to economic participants.
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The value of GDP as a measure of the quality of life for a given country may be limited.
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A variety of measures of national income and output are used in economics to estimate total economic activity in a country or region.
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Personal income is an individual's total earnings from wages, investment interest, and other sources.
Disposable income is the income left after paying taxes.
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Gross domestic product (GDP) per capita is the mean income of people in an economic unit.
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Real GDP growth is the value of all goods produced in a given year; nominal GDP is value of all the goods taking price changes into account.
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The GDP deflator is a price index that measures inflation or deflation in an economy by calculating a ratio of nominal GDP to real GDP.
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Inflation is a persistent increase in the general price level, and has three varieties: demand-pull, cost-push, and built-in.
![Thumbnail](../../../../../figures.boundless-cdn.com/20378/square/r-price-index-us-1913-2004.jpg)
The consumer price index (CPI) is a statistical estimate of the change in prices of goods and services bought for consumption.