ECON Chapter 2 notes.txt

The total value of final goods and services produced within a nation�s borders in a given time period.

The value of output measured in current prices.

The inflation-adjusted value of the GDP: the value of output measured in constant prices.

Total GDP divided by total population average GDP.

An increase in real GDP output, an expansion of production possibilities.

Expenditures on or the production of new plant and equipment (capital) in a fiven time period, plus changes in business inventories.

• 1. Household consumption
• 2. Business Investment
• 3. Government Services
• 4. Exports

Payments to individuals for which no current goods or services are exchanged, e.g. social security, welfare, unemployment

Goods and services sold to foreign buyers

Goods and services purchased from foreign sources

Service economy

Resources inputs used to produce goods and services e.g. land, labor, capital, entrepreneurship.

Production processes that use a high ratio of capital to labor inputs.

Output per unit of input. E.g. output per labor hour.

The knowledge and skills possessed by the workforce.

The high productivity of the U.S. economy results from using highly educated workers in capital-intensive production processes.

A firm that produces the entire market supply og a particular good or service.

Costs (or benefits) of a market activity borne by a third party.

The way total personal income is divided up among households or income classes.

A tax system in which tax rates rise as income rise.

A tax system in which tax rates fall as incomes rise.