Chapter 6 Flashcards
Intermediate goods
goods used as inputs to produce another good, eg wheat
final goods
are goods used for final consumption, eg car
GDP
value of all FINAL goods and services produced domestically during a certain period of time, the sum of all added values ar different stages of production
Durable
used repeatedly for more than 1 year, eg car house
Non Durable
used only once, eg apple
Semidurable
used more than once with a year, eg pen
Fixed investment
capital goods like machines used for productions
residential investments
new houses built
additions to inventory
unsold items
Net investment
new machines purchased to increase our productive capacity
Depreciation
new machines purchased to replace depreciated ones
Gross investment
total investment
expenditure method
it measures GDP by adding how much is spent on domestically produced final goods and services during a certain period
value added method
it measures GDP by adding all added values at different stages of production
Income method
it measures GDP by adding income received by owners of inputs used to produce the domestic goods and services
percapita GDP
takes into account the size of the population to compare standards of living in different countries
GNP
value to all final goods and services produced by our citizens (who have our nationality) no matter where they live
Circular flow
shows the flow of income and expenditure between different sectors in the economy
Nominal GDP
Value of all final goods and services produced domestically during a given year using current prices
Real GDP
Value of all final goods and services produced domestically during a given year using the base year price
