Chapter 13 Flashcards
GDP
Gross domestic product:
Market value of all final goods and services produced in the nation during a given period, usually a year
Economy
Structure of economic activity in a locality, a region, a country, a group of countries, a world
Consumption
Household purchases of final goods and services
Investment
Purchase of new plants, new equipment, new buildings, new residences, and net additions to inventories
Govt. purchases
Spending on goods and services by all levels of govt.
Net exports
Value of a country’s exports minus the value of its imports
Aggregate expenditure
Total spending on all final goods and services produced in the economy during the year
Aggregate income
Sum of all the income earned by resources suppliers in the economy during the year
Depreciation
Value of the capital stock that is used up or becomes obsolete in producing GDP during the year
Nominal GDP
Economy’s aggregate output based on prices at the time of the transaction; current-dollar GDP
Real GDP
Economy’s aggregate output measured in dollars of constant purchasing power; GDP measured in terms of goods and services produced
CPI
Consumer price index:
Measure of inflation based on the cost of a fixed “market basket” of goods and services purchased by a typical family
Business cycle
Fluctuations reflecting the rise and fall of economic activity relative to the long-term growth trend of the economy
Recession
Decline in total production lasting at least two consecutive quarters
Expansion
Phase of economic activity during which the economy’s total output increases