Econ Ch. 12 Test Flashcards
The total dollar value of all final goods and services a nation’s industries produce within its borders in one year
Gross domestic product (GDP)
goods and services that producers sold to ultimate users
final goods and services
how the government reports the basic GDP figure
Nominal GDP
Nonfinal goods, someone purchases to resell immediately or to incorporate into other goods
intermediate goods
Goods with a life expectancy of more than one year (vehicles, furniture, major appliances)
Durable goods
Items that consumers expect o go through or use within one year (shoes, soap, gas)
Nondurable goods
Include purchaces such as haircuts, tax prep, education
Consumer Services
The sum of all business spending on capital investment and unplanned inventories
Gross Private Domestic Investment (GPDI)/business investment
The difference between the dollar amount a nation takes in from the sale of exports and the dollars remaining for the nation to purchase imports
Net exports
Formula for calculating GDP
GDP = C + I + G + NX
Price index that rises as the price of all goods and services rises
GDP Implicit Price Deflator (GDP Deflator)
How to calculate real GDP
real GDP = GDP Deflator x100
Four economic groups that determine GDP
House, Business, Government, Foreign Exports
negative balance of trade
Trade deficit
positive balance of trade
Trade surplus
Government’s payment to producer to help with manufacturing costs
Subsidy
Claims policies will protect domestic manufacturing and jobs
Protectionist
Claims policies are best way to move the economy forward
Free TRade
6 reasons for a trade deficit
Domestic inability to produce goods, better quality of foreign goods, cheaper foreign materials, lower foreign wages, lower foreign capital cost, foreign subsidies
2 ways protectionists propose accomplishing goals
Trade quotas and tariffs
4 ways economists determine GDP
nominal GDP, Sale of final goods, produced past year, produced domestic goods
