GDP, gross domestic product, is the market value of all final goods and services in a nation during a period of time, usually a year . GNP, gross national product, is the market value of all final goods and services produced by all citizens of a nation during a period of one year. Real GDP is the value of all final goods and services provided during a given period of time based on prices existing in a selected base year. Nominal GDP is GDP adjusted for inflation. Final goods are finished goods and services; while intermediate goods are goods and services used as inputs for the production of final goods (these are not counted in GDP). Devaluation occurs when something loses its value over time. A recession is a downturn in the business cycle during which real GDP falls and the unemployment rate rises. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an Original EssayThe shortcomings of GDP include that GDP neglects leisure, does not include nonmarket transactions, does not focus on distribution, type, quality, or products, does not include the shadow economy, and does not examine economic problems, such as pollution. It is advantageous to use GDP because it shows the economic growth of a country and takes into account consumption, investments, government spending, exports and imports. The income approach to calculating GDP adds employment income plus rents plus profits plus net interest plus indirect taxes plus depreciation. The expenditure approach adds consumption, investment, government spending, as well as national exports minus national imports. The circular flow model is a diagram that shows the exchange of money, products and resources between households and businesses. Households exchange labor, land and capital for income (wages). Firms exchange costs for factors of production. The product market exchanges revenues for goods and services, while the product market exchanges goods and services for money from households. Offshoring occurs when a company moves its headquarters abroad to produce its products. Outsourcing occurs when a company purchases a product it previously produced from another company. Those employed include anyone who works at least one hour a week for pay or fifteen hours a week as an unpaid worker in a family business. The unemployed include anyone sixteen or older who is actively looking for work. There are three types of unemployment; frictional, structural and cyclical. Frictional unemployment is the normal search time required by workers with marketable skills who are changing jobs or re-entering the world of work. Structural unemployment is unemployment caused by a mismatch between the skills of unemployed workers and the skills required for existing job opportunities. Cyclical unemployment is unemployment caused by a lack of jobs during a recession. Leading indicators of variables that change before changes in real GDP, such as the average workweek and unemployment claims. Coincident indicators are variables that change with real GDP, such as agricultural payrolls and industrial production. Lagging indicators are variables that change after changes in real GDP, such as the unemployment rate. The four phases of the business cycle include peaks, recession, trough, and expansion. A peak occurs when real GDP reaches its maximum after growing during a recovery. A recession is a slowdown in economic activity.