Glossary of Terms

 

Gross Domestic Product

The GDP estimates that are used by the Department of Finance are provided by Statistics Canada. Statistics Canada estimates GDP in two ways:


GDP at market prices

Values GDP by totalling the expenditures required to purchase the goods and services produced. This method is often referred to as GDP from the expenditure side. Example of calculation


GDP at basic prices 

Values GDP by summing the payments made to the owners of the factors used in production (i.e., land, labour and machinery/buildings) inclusive of profit, which is the factor payment to entrepreneurs. Also referred to as GDP from the income side. GDP at basic prices equals GDP at market prices less taxes and subsidies on products. Example of calculation


Value added 

A third alternative way of calculating GDP is by summing the value added to a commodity at each stage of the production process. For example, a wheat farmer, a miller, and a baker each contribute to the production of bread; if we sum up the incremental value added by each individual we get an estimate of GDP.

Theoretically, all three of these methods of calculating GDP yield the same result.

 

 

Example of expenditure based GDP:  Newfoundland and Labrador millions of dollars in 2001

personal spending on consumer goods & services 8,751 government spending on goods & services 3,818 government investment in buildings, equipment & inventories 468 business investment in buildings, equipment & inventories 2,824 exports of goods & services 7,983 imports of goods & services -9,997 statistical discrepancy with other GDP calculations 69 GDP at market prices 13,916

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Example of income based GDP: Newfoundland and Labrador millions of dollars in 2001

wages, salaries and supplementary labour income 6,514 corporation profits before taxes 1,857 interest and miscellaneous investment income 814 net income of unincorporated businesses 978 inventory valuation adjustment -4 capital consumption allowances 2,147 statistical discrepancy -70 tax less subsidies on factors of production 351 GDP at basic prices 12,587 taxes less subsidies on products 1,329 GDP at market prices 13,916

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