economics 19

  1. business cycle
    alternating periods of economic expansion and recession
  2. expansion
    period of a business cycles during which total production and total employment are increasing
  3. recession
    period of a business cycle during which total production and total employment are decreasing
  4. economic growth
    ability of an economy to produce increasing quantities of goods and services
  5. inflation rate
    percentage increase in the price level from one year to the next
  6. gross domestic product
    market value of all final goods and services produced ina country during a period of time, typically one year
  7. final good or service
    a good or service purchased by a final user
  8. intermediate good or service
    a good or service that is an input into another good or service, such as a tire on a truck
  9. transfer payments
    payments by the gvmt to individuals for which the gvmt does not recieve a new good or service in return
  10. consumption
    spending by households on goods and services not including spending on new houses
  11. investment
    spending by firms on new factories, office buildings, machinery, and additions to inventory, plus spending by households and firms on new houses
  12. government purchases
    spennding by federal, state, and local gvmts on goods and services
  13. net exports
    exports minus imports
  14. value added
    market value a firm adds to a product
  15. underground economy
    buying and selling of goods and services that is concealed from the gvmt to avoid taxes or regulations or because the goods and services are illegal
  16. nominal GDP
    vakue of final goods and services evaluated at current year prices
  17. real GDP
    value of final goods and services evaluated at base year prices
  18. price level
    a measure of the average prices of goods and services in the economy
  19. GDP deflator
    a measure of the price level, calculated by dividing nominal GDP by real GDP and multiplying by 100
  20. limitations of GDP as measure of well-being
    • Inaccuracy of reported figures
    • nonmonetary Transactions not counted
    • nonmonetary Costs not subtracted
    • Negative items as Positive
    • Leisure time not counted
    • Junk
    • Distribution
  21. expenditures approach
    • C personal consumption expenditures
    • I spending on capital (investment) goods
    • G government purchases of goods and services
    • X-M net exports
  22. personal consumption expenditures
    • durable goods (three years)
    • nondurable goods
    • services
  23. spending on capital (investment) goods
    • final purchases on new capital equipment
    • new construction (including residential)
    • changes in business inventories
  24. government purchases of goods and services
    • does not include transfer payments
    • includes all levels of gvmt
  25. net domestic product
    GDP minus depreciation
  26. gross national product
    the value of final goods and services produced by residents of the united states even if the production takes place outside of the united states
Card Set
economics 19
chapter 19