Chap 6 Flashcards
the relatively short-term movement of the economy in and out of recession
business cycle
the process by which capital ages over time and therefore loses its value
depreciation
an especially lengthy and deep decline in output
depression
a potential mistake to be avoided in measuring GDP, in which output is counted more than once as it travels through the stages of production
double counting
long-lasting good like a car or a refrigerator
durable good
the price of one currency in terms of another currency
exchange rate
output used directly for consumption, investment, government, and trade purpose; contrast with intermediate good
final good and service
GDP divided by the population
GDP per capita
the value of the output of all goods and services produced within a country in a year
gross domestic product (GDP)
includes what is produced domestically and what is produced by domestic labor and business abroad in a year
gross national product (GNP)
output provided to other businesses at an intermediate stage of production, not for final users
intermediate good
good that has been produced but not yet been sold
inventory
includes all income earned; wages, profits, rent, and profit income
national income
GNP minus depreciation
net national product (NNP)
the economic statistic actually announced at that time, not adjusted for inflation
nominal value
short-lived good like food and clothing
nondurable good
during the business cycle, the highest point of output before recession begins
peak
an economic statistic after it has been adjusted for inflation
real value
a significant decline in national output
recession
product which is intangible (in contrast to goods) such as entertainment, healthcare, or education
service
all elements that affect people’s happiness, whether these elements are bought and sold in the market or not
standard of living
building used as residence, factory, office building, retail store, or for other purposes
structure
gap between exports and imports
trade balance
exists when a nation’s imports exceed its exports and is calculated as imports - exports
trade deficit
exists when a nation’s exports exceed it’s imports and is calculated as exports -imports
trade surplus
during the business cycle, the lowest point of output in a recession, before a recovery begins
trough
