Definitions of Key Economic Terms

Question	Answer
Population	Number of individuals resident within country, including citizens, landed immigrants/permanent residents and refugees
GDP (Gross Domestic Product)	Gross domestic product, or total dollar value of all final goods and services produced within a country's borders (by both nationals and foreigners) within a given year; using the income approach, GDP is measured by calculating all incomes earned by individuals, businesses and governments within a given year; using the expenditure approach, GDP is measured by calculating private consumer spending plus government spending plus commercial capital investment spending plus balance of trade [exports - imports] within a given year
GDP (Gross Domestic Product) at Purchasing Power Parity	GDP expressed in standardized national currency, typically US dollars, to ensure parity (equality) for purposes of "apples to apples" comparison.
GDP (Gross Domestic Product) at Official Exchange Rate	GDP expressed in the home-currency-denominated annual GDP figure divided by the bilateral average US exchange rate with that country in that year
GDP (Gross Domestic Product) Real Growth Rate	Annual year-over-year percentage increase or decrease in GDP after adjusting for inflation (price increases); real GDP growth rate should be contrasted with nominal GDP growth rate which does not take inflation into account and is therefore less accurate in terms of measuring true economic development.
GDP (Gross Domestic Product) per Capita	Annual GDP per person (annual GDP divided by national population)
GDP (Gross Domestic Product) Composition by Sector of Origin	Percentage breakdown of GDP produced within given sector/industry, including agriculture (farming, fishing, forestry), industry (mining, manufacturing, energy production, construction) and services (government agencies, professional services, transportation, finance, communication)
Recession	A decline in overall GDP over two consecutive quarters (quarter = three month period)
Agricultural Products	Specified cultivated crops (plants and animals) generating revenues, e.g., rice, wheat, poultry, pork.
Industries	Specified sectors/industries (types of businesses) generating revenues, e.g., textiles, chemicals, crude oil, motor vehicles.
Labour Force	Total number of employed persons and those owning businesses, plus unemployed persons actively seeking work.
Unemployment Rate	Percentage of labour force currently unemployed but actively seeking work.
Poverty Line	Annual after-tax income (e.g., $24,000/person) determined by governments or social agencies to be fair measure of relative poverty, based on family size and area of residence; also known as low income cut off (LICO) in Canada; according to Statistics Canada's LICO, individuals or families spending more than 63% of their after-tax income on food, clothing and shelter are deemed to be below poverty line, but please note that multiple low-income measurements exist in Canada today.
Annual Government Budget	Annual government revenues (income taxes, sales taxes, user fees, etc.) and expenditures (education, health care, transfer payments, social program spending, etc.)
Annual Government Budget Surplus (+) or Deficit (-)	Annual difference between government revenues and expenditures; difference represents budget surplus if positive (R > E) or budget deficit if negative (R < E); existence of annual deficit requires borrowing by government (debt financing) to fund shortfall.
National Debt	Accumulated annual national government deficits (borrowings) since inception minus any repayments of debt principal.
Fiscal Year	Any 12-month period over which annual revenues and expenses/expenditures are measured
Inflation Rate	Annual percentage increase in prices of specified basket of consumer goods and services, often known as consumer price index (CPI)
Commercial Bank Prime Lending Rate	Interest rate charged by major banks to their most trusted and creditworthy clients, i.e., large corporations; prime rate is used to set variable interest rate loans and lines of credit, e.g., variable-rate mortgage at prime + 2%; prime rate tends to fluctuate with Bank of Canada's "overnight rate" at which central bank (BoC) lends to major banks; prime rate is currently 3.7% in Canada (click here for explanation of prime rate)
International Balance of Payments	Accounting record of all financial exchanges, or inflows and outflows of currency, between particular nation and rest of world, and consisting of (i) current account balance and (ii) capital account balance; current account or capital account surplus means inflows are greater than outflows, while current account or capital account deficit means outflows are greater than inflows.
Capital Assets	Long-lasting, income-producing assets such as real estate, equipment, machinery, vehicles, stocks, bonds, etc.
Commodities	Goods that differ only minimally from one producer to another in terms of both quality and features, e.g., crops, metals, minerals, oil and natural gas, foreign currencies, bandwidth; commodities are typically traded in bulk on commodities exchanges; most commodities are either grown in or extracted from the earth
Exports	Goods and services sold to foreign companies and governments (goods out, money in)
Export Partners	Leading purchasers of exported goods listed by nation.
Imports	Goods and services purchased from foreign companies and governments (money out, goods in)
Import Partners	Leading sellers of imported goods listed by nation

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Definitions of Key Economic Terms

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	Created by Noah Anderson over 5 years ago