Chapter 12 Vocab

Question 1

A system that collects macroeconomic statistics on production, income, investment, and savings

Answer 1

National income accounting

Question 2

The dollar value of all final goods and services produced within a countries borders in a given year

Answer 2

Gross domestic product (GDP)

Question 3

Goods used in the production of final goods

Answer 3

Intermediate goods

Question 4

Goods that last for a relatively long time, such as refrigerators, cars, and DVD players

Answer 4

Durable

Goods

Question 5

Goods that last a short period of time, such as food, light bulbs, and sneakers

Answer 5

Nondurable goods

Question 6

GDP measured in current prices

Answer 6

Nominal GDP

Question 7

GDP expressed in constant or unchanging prices

Answer 7

Real GDP

Question 8

The annual income earned by US owned firms and US citizens

Answer 8

gross national product

Question 9

The loss of value of capital equipment that results form normal wear and tear

Answer 9

Depreciation

Question 10

The average of all prices in the economy

Answer 10

Price level

Question 11

The total amount of goods and services in the economy available at all possible price levels

Answer 11

Aggregate supply

Question 12

The amount of goods and services in the economy that will be purchased at all possible price levels

Answer 12

Aggregate demand

Question 13

A period of macroeconomic expansion followed by a period of contraction

Answer 13

Business cycle

Question 14

A period of economic growth as measured by a rise in real GDP

Answer 14

Expansion

Question 15

A steady long term increase in real GDP

Answer 15

Economic growth

Question 16

The height of an economic expansion, when real GDP stops rising

Answer 16

Peak

Question 17

A period of economic decline marked by falling real GDP

Answer 17

Contraction

Question 18

The lowest point in an economic contraction, when real GDP stops falling

Answer 18

Trough

Question 19

A prolongs economic contraction

Answer 19

Recession

Question 20

A recession that is especially long and severe

Answer 20

Depression

Question 21

A decline in real GDP combined with a rise in the price level

Answer 21

Stagflation

Question 22

Key economic variables that economists use to predict a new phase of a business cycle

Answer 22

Leading indicators

Question 23

Real GDP divided by the total population

Answer 23

Real GDP per capita

Question 24

Process of increasing the amount of capital per worker

Answer 24

Capital deepening

Question 25

Income not used for consumption

Answer 25

Saving

Question 26

The proportion of disposable income that is saved

Answer 26

Savings rate

Question 27

An increase in efficiency gained by producing more output without using more inputs

Answer 27

Technological progress