Chapter Twelve Vocabulary: Gross Domestic Product and Growth

Question 1

National Income Accounting

Answer 1

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

Question 2

Gross Domestic Product (GDP)

Answer 2

the dollar value of al final goods and services produces within a country’s borders in a given year

Question 3

Intermediate Goods

Answer 3

goods used in the production of final goods

Question 4

Durable Goods

Answer 4

goods that last for a relatively long time, such as refrigerators, cars, and DVDs

Question 5

Nondurable Goods

Answer 5

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

Question 6

Nominal GDP

Answer 6

GDP measured in curent prices

Question 7

Real GDP

Answer 7

GDP expressed in constant, or unchanging, prices

Question 8

Gross National Product (GNP)

Answer 8

the annual income earned by U.S.-owned firms and U.S. citizens

Question 9

Depreciation

Answer 9

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

Question 10

Price Level

Answer 10

the average of all prices in the economy

Question 11

Aggregate Supply

Answer 11

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

Question 12

Aggregate Demand

Answer 12

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

Question 13

Business Cycle

Answer 13

a period of macroeconomic expansion followed by a period of contraction

Question 14

Expansion

Answer 14

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

Question 15

Economic Growth

Answer 15

a steady, long-term increase in real GDP

Question 16

Peak

Answer 16

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

Question 17

Contraction

Answer 17

a period of economic decline marked by falling real GDP

Question 18

Trough

Answer 18

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

Question 19

Recession

Answer 19

a prolonged economic contraction

Question 20

Depression

Answer 20

a recession that is especially long and severe

Question 21

Stagflation

Answer 21

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

Question 22

Leading Indicators

Answer 22

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

Question 23

Real GDP Per Capita

Answer 23

real GDP divided by the total population

Question 24

Capital Deepening

Answer 24

process of increasing the amount of capital per worker

Question 25

Saving

Answer 25

income not used for consumption

Question 26

Savings Rate

Answer 26

the proportion of disposable income that is saved

Question 27

Technological Progress

Answer 27

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