Chapter 13

Question 0

GDP

Answer 0

Gross domestic product:

Market value of all final goods and services produced in the nation during a given period, usually a year

Question 1

Economy

Answer 1

Structure of economic activity in a locality, a region, a country, a group of countries, a world

Question 2

Consumption

Answer 2

Household purchases of final goods and services

Question 3

Investment

Answer 3

Purchase of new plants, new equipment, new buildings, new residences, and net additions to inventories

Question 4

Govt. purchases

Answer 4

Spending on goods and services by all levels of govt.

Question 5

Net exports

Answer 5

Value of a country’s exports minus the value of its imports

Question 6

Aggregate expenditure

Answer 6

Total spending on all final goods and services produced in the economy during the year

Question 7

Aggregate income

Answer 7

Sum of all the income earned by resources suppliers in the economy during the year

Question 8

Depreciation

Answer 8

Value of the capital stock that is used up or becomes obsolete in producing GDP during the year

Question 9

Nominal GDP

Answer 9

Economy’s aggregate output based on prices at the time of the transaction; current-dollar GDP

Question 10

Real GDP

Answer 10

Economy’s aggregate output measured in dollars of constant purchasing power; GDP measured in terms of goods and services produced

Question 11

CPI

Answer 11

Consumer price index:

Measure of inflation based on the cost of a fixed “market basket” of goods and services purchased by a typical family

Question 12

Business cycle

Answer 12

Fluctuations reflecting the rise and fall of economic activity relative to the long-term growth trend of the economy

Question 13

Recession

Answer 13

Decline in total production lasting at least two consecutive quarters

Question 14

Expansion

Answer 14

Phase of economic activity during which the economy’s total output increases

Question 15

Leading economic indicators

Answer 15

Measures that usually predict, or lead to, recessions or expansions

Question 16

Aggregate output

Answer 16

Composite measure of all final goods and services produced in an economy during a given period;
Real GDP

Question 17

Aggregate demand

Answer 17

Relationship between average price of aggregate output and the quantity of aggregate output demanded with other things constant

Question 18

Price level

Answer 18

Composite measure reflecting the prices of all goods and services in the economy relative to prices in a base year

Question 19

Aggregate demand curve

Answer 19

Curve representing the relationship between the economy’s price level and real GDP demanded per period

Question 20

Aggregate supply curve

Answer 20

Curve representing the relationship between the economy’s price level and real GDP supplied per period