Just as your grade or performance on a single homework assignment or an in-class quiz does not give a measure of your overall performance for an entire semester, a measure of Gross Domestic Product (GDP) at a particular point in time does not tell us about an economy's performance over time. Looking at GDP at a point in time is a static analysis—a snapshot of the economy. To measure how much our national economy grows, we must look at our economy over time. Instead of a snapshot of the economy, looking at GDP over time is more like watching a movie about the economy.
At the completion of this short module, you will be able to:
- Distinguish between real and nominal GDP.
- Identify the importance of a growing economy.
- Recognize when real GDP is above, below or at trend.