The GDP Deflator measures the level of prices of all new, domestically produced, final goods and services in an economy. It compares Nominal GDP (current prices) with Real GDP (base year prices).

GDP measures production within borders. GNP measures production by nationals, regardless of location. Therefore, GNP = GDP + Net Factor Income from Abroad (Income earned by residents abroad minus income earned by foreigners domestically).

Real GDP Growth ˜ Nominal GDP Growth - Inflation Rate. (8% - 5% = 3%). Real GDP represents purchasing power growth.

NDP at Factor Cost represents the total income earned by factors of production within the domestic territory. NNP at Factor Cost is called "National Income".

Market prices include indirect taxes (which increase price) and exclude subsidies (which lower price). To get back to the actual cost of production (Factor Cost), one must remove the tax component (Subtract Indirect Taxes) and add back the government support (Add Subsidies).

National Income accounts for production activity. Transfer payments are merely a redistribution of existing income from one group (taxpayers) to another (beneficiaries) without any corresponding economic output.

Green GDP accounts for the environmental consequences of economic growth. It subtracts the value of natural capital loss (pollution, resource depletion) from traditional GDP.

National Income includes the value of goods and services produced. Imputed rent is the estimated rent a house owner would pay to live in their own house if they were renting it. It represents the value of housing services produced. Transfer payments, second-hand sales, and non-economic activities (housewife services) are excluded.

Equation: MV = PY. Here M=500, P=2, Y=1000 (Real GDP). So, 500 * V = 2 * 1000. 500V = 2000. V = 4. Velocity is 4.

Market Price - Net Indirect Taxes = Factor Cost. Therefore, NNP(MP) - NIT = NNP(FC), which is technically defined as National Income.

PDI is the income actually available to individuals for consumption or saving. It is obtained by subtracting personal direct taxes (like income tax) and fees/fines paid to the government from Personal Income.

The Product Method sums up the Gross Value Added (GVA) by all sectors of the economy to avoid double counting of intermediate goods.

Standard GDP ignores the environmental costs of production. Green GDP deducts the cost of pollution, depletion of natural resources (like oil or forests), and degradation of ecosystems from the GDP figure. This provides a more sustainable measure of economic welfare.

Per Capita Income = Total Income / Total Population. For the average person to be better off in real terms, the total economic pie (Real GDP) must expand at a rate higher than the number of people sharing it (Population growth).

Nominal GDP can be misleading due to exchange rates. PPP adjusts GDP to reflect what that money can actually buy in each country (e.g., a haircut costs less in India than in USA). It provides a better comparison of real living standards.