Ch.9 Flashcards
(27 cards)
Economics 12
Chapter 9 Vocabulary
Chain Fisher volume index
A newer method of determining the GDP deflator that uses a formula to “rebase” the GDP each quarter instead of comparing it to a base year.
Consumer Price Index (CPI)
A price index that measures changes in the prices of consumer goods.
Consumption
Household spending on goods and services.
Economic Growth
An increase in an economy’s total production of goods and services.
Expenditure Approach
A calculation of the GDP that totals all of the economy spends on final goods and services in one year.
full employment
The lowest possible rate of unemployment, seasonally adjusted, after allowing for frictional and structural unemployment.
GDP deflator
A broad price index to measure price changes on all goods and services in the GDP, not just consumer goods and services.
GDP gap
The cost of unemployment to the economy, measured by the amount of potential output that exceeds actual output.
Gross Domestic Product
The total value of all final goods and services produced by an economy in a given year.
Gross National Product
An older measure of national output; the total of all Canadian-owned factors of production in Canada, or located anywhere in the world. The GNP was replaced as an economic indicator by the GDP in 1986.
hidden economy
The growing practice in Canada and other mixed economies of citizens trading one service for another to avoid taxation or to ensure a more personal level of services; illegal transactions occurring in the economy that are not recorded in GDP calculations (such as payment of employees “off the books”); and non market production.
Income Approach
A calculation of the GDP that totals all incomes earned by the different factors of production in producing all final goods and services.
Indexing
An adjusting made to some wages and pension payments to offset year-to-year price increases, using the CPI as a guide.
inflation
A general rise in the price levels of an economy.
Inflation rate
The annual percentage by which the Consumer Price Index has risen.
Investment
A business’s purchase of capital goods, construction of new buildings.
labour force
The total of all Canadians holding jobs plus all those actively seeking work.
macroeconomics
The study of the economy as a whole in contrast to microeconomics, which studies its parts.
Multiple-Counting
Inflating the size of the GDP by including the value of the components of the final goods in the total.
nominal (or money) GDP
The total value of the GDP before it is adjusted for price increases; also called money GDP.
Okun’s Law
A formula that states that for every percentage point that the actual unemployment rate exceeds the natural rate, a GDP gap of two percent occurs.
per capita GDP
The total value of a nation’s goods and services divided by its population; also called per capita GDP.
potential GDP
The output that the economy can produce if the unemployment rate is not higher than the natural unemployment rate.
