Ch 2 Vocab Flashcards
Gross domestic product, or GDP
The total income earned domestically, including the income earned by foreign-owned factors of production; the total expenditure on domestically produced goods and services.
national income accounting,
The accounting system that measures GDP and many other related statistics.
Stock
A variable measured as a quantity at a point in time. (Cf. flow.) 2. Shares of ownership in a corporation.
Flow
A variable measured as a quantity per unit of time.
Value added
The value of a firm’s output minus the value of the intermediate goods the firm purchased.
Imputed value
An estimate of the value of a good or service that is not sold in the marketplace and therefore does not have a market price.
Nominal GDP
Measured in current dollars; not adjusted for inflation.
Real GDP
Measured in constant dollars; adjusted for inflation.
GDP deflator
The ratio of nominal GDP to real GDP; a measure of the overall level of prices that shows the cost of the currently produced basket of goods relative to the cost of that basket in a base year.
National income accounts identity
The equation showing that GDP is the sum of consumption, investment, government purchases, and net exports.
Consumption
Goods and services purchased by consumers.
Investment
Goods purchased by individuals and firms to add to their stock of capital.
Government purchases
Goods and services bought by the government.
Net exports
Exports minus imports.
Consumer price index (CPI)
A measure of the overall level of prices that shows the cost of a fixed basket of consumer goods relative to the cost of the same basket in a base year.
