Chapter 15 Flashcards
GDP
the market value of all final goods and services produced within a country in a given period of time
Consumption
spending by households on goods and services, with the exception of purchases of new housing (includes rent and rental value of house but not purchase price or mortgage)
Government Purchases
spending on goods and services by local, state, and federal governments, does not include transfer payments such as Social Security
Investment
spending on business capital, residential capital, and inventories. Purchases of goods that will be used to produce other goods and services in the future. Any expenditure for a company is investment.
Net Exports
spending on domestically produced goods by foreigners (exports) minus spending on foreign goods by domestic residents (imports)
Real GDP
the production of goods and services valued at constant (base-year) prices. Measures the economy’s production of goods and services.
Nominal GDP
the production of goods and services valued at current prices
GDP deflator
a measure of the price level calculated as the ratio of nominal GDP to real GDP times 100
Inflation
situation in which the economy’s overall price level is rising
Inflation rate
the percentage change in some measure of the price level from one period to the next
Final goods
intended for the end user (ex: car as well as tires (parts of a whole something but not separate when bought as a car)
Intermediate goods
used as components or ingredients in the production of other goods
Net National Product
total income of a nation’s residents minus losses from depreciation (the consumption of fixed capital)
GDP deflator Formula
Nominal GDP/Real GDP x 100
Nominal GDP Formula
GDP deflator x real GDP/100
