Understanding Gross Domestic Product
The concept of gross domestic product is complex and, to understand it, you will need to become familiar with a number of technical terms and abbreviations. To help you, I have created this glossary, containing definitions for the most important GDP-related words you are likely to encounter.
The glossary contains 15 entries, all of which I have explained in detail in Understanding Gross Domestic Product. For more information about these terms, look for a link (for example,) showing the number of the section where that term is discussed. Just click on the link to jump to the exact place in the text where that particular term is explained.
applied economics: The use of economic principles to study and solve practical problems.
barter: Transactions, often informal, in which goods or services are used for payment instead of money. Goods and services exchanged by barter are not tracked by government statisticians and, hence, are not counted in estimates of gross domestic product. See also in-kind payments.
black market: Describes economic activity based on illegal transactions. Some examples of black market activity are the illegal buying and selling of stolen goods, drugs, and copyrighted material. Other examples are prostitution, bribes, smuggling, and (in some countries) illegal currency exchange. Because such activities are against the law, the transactions are hidden from government statisticians and, hence, cannot be tracked or valued accurately. Thus, the goods and services produced by the black market are not counted in estimates of gross domestic product. Same as undercover economy.
central bank: An organization that manages the money supply and interest rates for a country or region. In many jurisdictions, central banks also regulate all or part of the banking industry. In the U.S., the central bank is the Federal Reserve; in the European Union, it is the European Central Bank; in Canada, the Bank of Canada. One of the principal jobs of central bankers is to encourage economic growth without creating too much inflation. Central bankers exert control over the economy indirectly, mostly by setting specific interest rates and by increasing or decreasing the money supply.
economic indicator: A statistic, such as GDP, that is used to describe a particular economic activity. Economic indicators are usually estimated by government statisticians.
GDP: Abbreviation for gross domestic product.
GDP per capita: The ratio of GDP to population for a specific economic region (GDP/population). GDP per capita values are commonly used to compare GDP values for economic regions with widely differing populations.
goods: Material objects, such as cars, food, computers, shoelaces, and so on: tangible stuff. In most countries, the majority of goods are produced by two sectors of the economy: agriculture and manufacturing. Goods and services are the two types of values that are quantified when determining a gross national product. See also services. 
goods and services: An expression used to describe the values that are quantified when determining a gross domestic product. For more information see the separate entries for goods and services.
gross domestic product: An estimate of the monetary value of all the goods and services produced within a specific region of the world during a certain time period. Abbreviated GDP. See also goods and services.
in-kind payment: A payment made using goods or services rather than money, for example, if I fix my neighbor's computer and, in return, he gives me a lamp for my living room. Although we have provided goods and services with real value, because they are informal, in-kind payments, they are not counted as part of the GDP. See also barter.
land mass: The total surface area of a country or region, not including water. One way to compare GDP values for economic regions of widely differing size is to look at the ratio of GDP to land mass, that is, GDP/(land mass).
services: Work that is economically valuable but does not produce anything tangible. For example, lawyers, doctors, carpenters, computer programmers, police, and athletes all provide services. Goods and services are the two types of values that are quantified when determining a gross national product. See also goods. 
underground economy: See black market.
unpaid labor: Services that people provide for free. That is, services for which the provider receives neither money nor an in-kind payment. The three most important sources of unpaid labor are professionals, volunteers, and homemakers. Although unpaid labor has real value, it is not counted as part of the GDP.
© All contents Copyright 2017, Harley Hahn