Chap 6

Question 1

the relatively short-term movement of the economy in and out of recession

Answer 1

business cycle

Question 2

the process by which capital ages over time and therefore loses its value

Answer 2

depreciation

Question 3

an especially lengthy and deep decline in output

Answer 3

depression

Question 4

a potential mistake to be avoided in measuring GDP, in which output is counted more than once as it travels through the stages of production

Answer 4

double counting

Question 5

long-lasting good like a car or a refrigerator

Answer 5

durable good

Question 6

the price of one currency in terms of another currency

Answer 6

exchange rate

Question 7

output used directly for consumption, investment, government, and trade purpose; contrast with intermediate good

Answer 7

final good and service

Question 8

GDP divided by the population

Answer 8

GDP per capita

Question 9

the value of the output of all goods and services produced within a country in a year

Answer 9

gross domestic product (GDP)

Question 10

includes what is produced domestically and what is produced by domestic labor and business abroad in a year

Answer 10

gross national product (GNP)

Question 11

output provided to other businesses at an intermediate stage of production, not for final users

Answer 11

intermediate good

Question 12

good that has been produced but not yet been sold

Answer 12

inventory

Question 13

includes all income earned; wages, profits, rent, and profit income

Answer 13

national income

Question 14

GNP minus depreciation

Answer 14

net national product (NNP)

Question 15

the economic statistic actually announced at that time, not adjusted for inflation

Answer 15

nominal value

Question 16

short-lived good like food and clothing

Answer 16

nondurable good

Question 17

during the business cycle, the highest point of output before recession begins

Answer 17

peak

Question 18

an economic statistic after it has been adjusted for inflation

Answer 18

real value

Question 19

a significant decline in national output

Answer 19

recession

Question 20

product which is intangible (in contrast to goods) such as entertainment, healthcare, or education

Answer 20

service

Question 21

all elements that affect people’s happiness, whether these elements are bought and sold in the market or not

Answer 21

standard of living

Question 22

building used as residence, factory, office building, retail store, or for other purposes

Answer 22

structure

Question 23

gap between exports and imports

Answer 23

trade balance

Question 24

exists when a nation’s imports exceed its exports and is calculated as imports - exports

Answer 24

trade deficit

Question 25

exists when a nation’s exports exceed it’s imports and is calculated as exports -imports

Answer 25

trade surplus

Question 26

during the business cycle, the lowest point of output in a recession, before a recovery begins

Answer 26

trough