1. Gross domestic product (GDP) measures both the total output of the economy and the total expenditure on the economy’s output of goods and services. Ignoring the net income earned by foreigners operating in Canada, GDP also measures the total income of all Canadians.

  2. Nominal GDP values goods and services at current prices. Real GDP values goods and services at constant prices. Real GDP rises only when the amount of goods and services has increased, whereas nominal GDP can rise either because output has increased or because prices have increased.

  3. GDP is the sum of four categories of expenditure: consumption, investment, government purchases, and net exports.

  4. The consumer price index (CPI) measures the price of a fixed basket of goods and services purchased by a typical consumer. Like the GDP deflator, which is the ratio of nominal GDP to real GDP, the CPI measures the overall level of prices.

  5. The unemployment rate shows what fraction of those who would like to work do not have a job. When real GDP grows more slowly than its normal rate, unemployment rises.