CHAPTER 6 : INTRODUCTION TO MACROECONOMICS AND GROSS DOMESTIC PRODUCT – Flashcards
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Macroeconomics
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the study of economy of an entire nation or society. Study of broader economy
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Microeconomics
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the study of individual people, firms, and industries. You study what people buy, what jobs they take, and how they distribute their income between purchases and savings
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Gross Domestic Product (GDP)
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the market value of all final goods and services produced within a country during a specific period
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Three uses of GDP
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-Measuring Living Standards -Measuring Economic Growth -Measuring Business Cycles
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Per Capita GDP
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GDP per person
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Inflation
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the growth in overall level of prices in an economy
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Real GDP
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GDP adjusted for changes in prices
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Economic Growth
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measured as the percentage change in real per capita GDP
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Recession
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a short-term economic downturn
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Great Recession
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the U.S recession lasting from December 2007 to June 2009
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Business cycle
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a short-run fluctuation in economic activity
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Economic Expansion
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a phase of the business cycle during which the economy is growing faster than usual
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Economic Contraction
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a phase of the business cycle during which the economy is growing more slowly than usual
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Service
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an output that provides benefits without the production of a tangible product
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Intermediate good (s)
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a good that firms repackage or bundle with other goods for sale at a later stage
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Final goods
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a good sold to final users
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Gross National Product (GNP)
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the output produced by workers and resources owned by residents of the nation
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Consumption
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the purchase of final goods and services by households, excluding new housing
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Non-durable goods
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goods that are consumed over a short period
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Durable Goods
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goods that are consumed over a long period
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Investment
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private spending on tools, plant, and equipment used to produce future output
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Government spending
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spending by all levels of government on final goods and services
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Net Exports
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exports minus imports of final goods and services
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Nominal GDP
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GDP measured in current prices, and not adjusted for inflation
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Price Level
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an index of the average prices of goods and services throughout the economy
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GDP Deflator
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a measure of the price level that includes prices of the final goods and services included in GDP
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Shortcomings of GDP
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-Non-Market Goods -Underground Economy -Quality of Environment -Leisure Time
