Chapter 4 - GDP: Measuring Total Production and Income Flashcards
Intermediate good or service
A good or service that is an input into another good or service.
Final good or service
A good or service purchased by a final user.
Net exports
The value of a country’s total exports minus the value of a country’s total imports
Government purchases
Spending by governments on goods and services.
Gross Domestic Product (GDP)
The market value of all goods and services produced in a geographic area during a period of time.
Investment
Spending by firms on new factories, office buildings, machinery, and additions to inventories, plus spending by households and firms on new homes.
Transfer payments
Payments by the government to households for which the government does not receive a new good or service in return.
Consumption
Spending by households on goods and services, not including spending on new homes.
Imports
Goods and services bought domestically but produced in other countries.
Exports
Goods and services produced domestically but sold to foreign households or firms.
Value added
The market value a firm adds to a product.
GDP is a measurement of …
The market value of all final goods.
GDP equation
Y=C+I+G+NX
Underground economy
Buying and selling of goods and services that is concealed from the government to avoid taxes or regulations or because the goods and services are illegal.
Expansion
The period of a business cycle during which total production and total employment are increasing.
Real GDP
The value of final goods and services evaluated at base-year prices.
Price level
A measure of the average prices of goods and services on the economy.
Business cycle
Alternating periods of economic expansion and economic recession.
Recession
The period of the business cycle during which total production and total employment are decreasing.
Household production
Goods and services people produce for themselves.
Nominal GDP
The value of final goods and services evaluated at current-year prices.
Inflation rate
The percentage increase in the price level from one year to the next.
GDP deflator
A measure of the price level, calculated by dividing nominal GDP by real GDP and multiplying by 100.
