Flashcards in Chapter 17 Deck (16):
Gross domestic product
The market value of all final goods and services produced in the economy during a defined period of time.
Problem that can arise when calculating gross domestic product (GDP). Occurs when the price of both final and intermediate goods is included when
calculating GDP. This occurs because most products we buy are manufactured in stages by many different companies.
intermediate goods and services
Goods and services used as components to produce final goods and services. When calculating gross domestic product (GDP), their value is
captured in the final product’s price.
final goods and services
Intermediate goods and services are used as components to produce final goods and services. The value of gross domestic product (GDP) is calculated
by counting only final goods and services produced.
Spending by households on goods and services. Note that this does not include new housing, which instead falls under the investment category.
Spending on capital, equipment, inventories, and structures.
Spending on goods and services by local, state, and federal governments. Note that this is different from transfer payments such as Social
Security, which do not affect total production in an economy.
Goods and services that are produced domestically and sold in other countries. An increase in exports adds to gross domestic product (GDP) since the good was produced locally.
Goods and services that are produced abroad and then purchased domestically. An increase in imports lowers gross domestic product (GDP) since domestic dollars are spent on foreign goods. Net exports, or the trade balance, provide a measure of the gap between exports and imports.
A measure of the gap between exports and imports. Also referred to as the trade balance.
Measures the gap between exports and imports. Also referred to as net exports.
A general and ongoing rise in prices in an economy.
Method in which GDP is stated in nominal values.
Method in which GDP is stated as nominal GDP minus the effect of inflation.
Refers to the number that is actually announced at a particular time for any economic statistic.