econ 2105

  1. Private savings
    disposable income that is not spent on consumption.
  2. financial markets.
    • The banking, stock, and bond markets, which
    • channel private savings and foreign lending into investment spending,
    • government borrowing, and foreign borrowing
  3. stock
    • share in the ownership of a company held by a
    • shareholder
  4. bond
    • borrowing in the form of an IOU that pays
    • interest.

  5. Gross
    domestic product
    or GDP
    total value of all final goods and services produced in the economy
  6. Aggregate spending
    • CS + IS + GP + X - IM
  7. GDP can be calculated three ways
    • Addup the value added

    of all producers

    C + I + G + X - IM

    factors of production

  8. Real GDP
    • total value of the final goods and services
    • produced in the economy during a base year
  9. Nominal
    • all final goods and services produced in the
    • economy during a given year, calculated using the prices current in the year in
    • which the output is produced.
  10. Chained
    • calculating changes in real GDP
    • using the average between the growth rate calculated using an early base year
    • and the growth rate calculated using a late base year.
  11. GDP per
    measure of average GDP per person
  12. aggregate
    price level
    • measure of the overall level of prices in the
    • economy
  13. A price index

    • ratio of the current cost of that market basket to the cost in a base year,
  14. inflation
    • yearly percentage change in a price index,
  15. The consumer price index
    • measures the cost of the market basket of a
    • typical urban American family.
  16. GDP
    • which measures the price level by calculating
    • the ratio of nominal to real GDP.
Card Set
econ 2105
chapter 7