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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
government spending on goods & services
government investment in buildings, equipment & inventories
business investment in buildings, equipment & inventories
exports of goods & services
imports of goods & services
statistical discrepancy with other GDP calculations
GDP at market prices 13,916
Example of income based GDP:
Newfoundland and Labrador millions of dollars in 2001
wages, salaries and supplementary labour income
corporation profits before taxes
interest and miscellaneous investment income
net income of unincorporated businesses
inventory valuation adjustment
capital consumption allowances
statistical discrepancy
tax less subsidies on factors of production
GDP at basic prices
taxes less subsidies on products
GDP at market prices 13,916
Economic Research & Analysis Division, Department of Finance - (709) 729-3255 - infoera@gov.nl.ca

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