Definition of Potential Output or Potential GDP

Potential Output or Potential GDP

output produced when the economy is operating at its natural rate of unemployment.

Gross domestic product (GDP)

The market value of goods and services produced over time including the
income of foreign corporations and foreign residents working in the U.S., but excluding the income of U.S.
residents and corporations overseas.

Input-output tables

Tables that indicate how much each industry requires of the production of each other
industry in order to produce each dollar of its own output.

input-output coefficient

a number (prefaced as a multiplier
to an unknown variable) that indicates the rate at which each
decision variable uses up (or depletes) the scarce resource

Full-Employment Output

The level of output produced by the economy when operating at the natural rate of unemployment.

GDP

See gross domestic product.

GDP Deflator

Price index used to deflate nominal gdp to real gdp by dividing nominal gdp by the gdp deflator.

National Output

gdp.

Output Gap

The difference between full employment output and current output.

Real GDP

gdp expressed in base-year dollars, calculated by dividing nominal gdp by a price index.

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