By Valeria Popa: Let us first distinguish between GNI, GDP and GNP to understand how is GNI different from these two measuring indicators. GNI compared to GDP and GNP While Gross Domestic Product (GDP) and Gross National Product (GNP) measure the output of an economy, Gross National Income (GNI) is an indicator for the income realized by the residents of a country. According to the World’s Bank...
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Consumer Price Index and its Influence on the long-term interest rate
Valeria Popa In previous articles you have learned about macroeconomic indicator like GDP which is highly important for understanding business cycles and economic performances and GNI which can offer a perspective on the living standards of a country’s residents. We are now going to have a look at the Consumer Price Index (CPI), a macroeconomic indicator with a significant impact on interest...
GDP Growth Rate and Calculation
What is GDP growth rate and how to calculate it Since the media often talk about the growth rate of an economy, it is important to clarify and to correctly define what the growth rate of GDP is. This indicator has a lot more meanings and it can be used to measure different components of a country’s economy. Nevertheless, it generally gives an idea of the economic growth or the economic decline....
Nominal GDP, Real GDP and the GDP Deflator: Formulas, Worked Examples and Index-Number Bias
An economy that produces nothing new but doubles every price reports 100% nominal GDP growth. A complete guide to nominal GDP, real GDP and the GDP deflator — with worked calculations, why the deflator excludes imports, base-year bias, chain weighting, and Nordhaus on the price of light.
Difference between GDP and GNP
Although both GDP and GNP measure the size of an economy, either for business or economics forecasting purposes, they are not one and the same thing. Therefore, one should not be confused by their similar terminology. Simply put, while GDP looks at the strength of a country’s local economy, encompassing not only residents, but also immigrants and tourists, GNP focuses on the economic performance...
Three Approaches of Calculating GDP: Production, Expenditure and Income (Complete Guide)
Three completely different accounting routes — production, expenditure, and income — must arrive at exactly the same number. A complete guide to calculating GDP, with the value-added identity, the C+I+G+(X−M) formula, Ireland’s 26% growth year, Nigeria’s rebasing, and Kuznets’s original warning.
GDP Introduction and Usage
Although GDP is commonly used to measure the size of an economy nowadays, Simon Kuznets, the economist who created this tool has warned against its use as a measure of welfare. Commissioned by the US Congress in 1934 to create a system that would monitor the productivity of the United States of America, Kuznets proposed the GDP or Gross Domestic Product. However, this metric aimed only at...
Unemployment Rate: Definition, Measurement, Okun’s Law and Why the Statistic Misleads
A person who stops looking for work isn’t unemployed — they vanish from the statistic, and the rate falls. A complete guide to measuring unemployment: the ILO criteria, U-3 vs U-6, the four types, Okun’s Law, the Beveridge curve, and why Blanchard and Summers showed the natural rate isn’t natural.
Demand-Pull vs Cost-Push Inflation and Stagflation: Diagrams, Evidence and Exam Technique
Demand-pull and cost-push inflation produce the same rise in prices and opposite movements in output — and that asymmetry determines the entire policy response. A complete guide with AD/AS analysis, the expectations-augmented Phillips curve, the 1973 oil shock, and what Bernanke and Blanchard found about the 2021–2023 surge.
Economic Impact of Inflation
There are many deadly effects of inflation. Two of the most important are: Redistribution of Wealth and Income among the People Distortion in the Production of Goods, employment and relative Prices (During Periods of Inflation all prices and wages do not change at the same rate; so changes in relative prices occur) Impact on Wealth and Income This effect is focused on the assets and liabilities...
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