A Glossary of Terms

While I try to keep to plain English in Stubborn Mule blog posts, from time to time some jargon creeps in, particularly from finance and economics. For the benefit of those lucky enough to have avoided this jargon to date, I will compile explanations here. First cab off the rank is GDP.

GDP, Gross Domestic Product

GDP is a measure of a country's economic activity. It is the total of all final goods and services produced in a country. Here "final" means that there should be no double counting. if a factory produces a widget and sells it to a retailer who sells it to you, only the "final" sale of the widget should be counted. Equivalently, the original sale to the retailer could be counted and then only the additional mark-up (or "value add") charged by the retailer is counted. Some argue that GDP is a seriously flawed approach to assessing a country's productivity, but it is very widely used.