Economics ch 12: gross domestic product and growth – Flashcards
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national income accounting
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a system that collects macroeconomic statistics on production, income, investment, and savings
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gross domestic product (GDP)
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the dollar value of all final goods and services produced within a country's borders in a given year
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intermediate goods
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goods used in the production of final goods
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durable goods
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goods that last for a relatively long time, such as refrigerators, cars, and DVD players
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nondurable goods
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goods that last a short period of time, such as food, light bulbs, and sneakers
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nominal GDP
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GDP measured in current prices
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real GDP
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GDP expressed in constant, or unchanging, prices
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gross national product (GNP)
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the annual income earned by US-owned firms and US residents
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depreciation
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the loss of the value of capital equipment that results from normal wear and tear
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price level
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the average of all prices in the economy
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aggregate supply
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the total amount of goods and services in the economy available at all possible price levels
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aggregate demand
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the amount of goods and services in the economy that will be purchased at all possible price levels
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business cycle
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a period of macro-economic expansion followed by a period of contraction
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expansion
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a period of economic growth as measured by a rise in real GDP
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economic growth
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a steady, long-term increase in real GDP
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peak
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the height of an economic expansion, when real GDP stops rising
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contraction
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a period of economic decline marked by falling real GDP
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trough
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the lowest point in an economic contraction, when real GDP stops falling
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recession
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a prolonged economic contraction
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depression
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a recession that is especially long and severe
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stagflation
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a decline in real GDP combined with a rise in the price level
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leading indicators
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key economic variables that economists use to predict a new phase of business cycle
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real GDP per capita
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real GDP divided by the total population
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capital deepening
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process of increasing the amount of capital per worker
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saving
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income not used for consumption
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savings rate
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the proportion of disposable income that is saved
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technological progress
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an increase in efficiency gained by producing more output without using more inputs
