GDP is the value of all final goods and services produced in the country within a
given period.
On the production side, output is paid out as factor payments to labor and capital.
On the demand side, output is consumed or invested by the private sector, used by
the government, or exported.
Y ≡ C + I + G + NX.
C + G + I + NX ≡ Y ≡ YD + (TA – TR) ≡ C + S + (TA – TR).
The excess of the private sector's saving over investment is equal to the sum of the
budget deficit and net exports.
Nominal GDP measures the value of output in a given period in the prices of that
period, that is, in current dollars.
Inflation is the rate of change in prices, and the price level is the cumulation of past
inflations.
Nominal interest rates give the return on loans in current dollars. Real interest rates
give the return in dollars of constant value.
The unemployment rate measures the fraction of the labor force that is out of work
and looking for a job.
The exchange rate is the price of one country's currency in terms of another's.
