FlashcardsChapter12
Term
Description
Gross domestic product (GDP)
the market value of all final goods and services produced within a country during a specific period. (330)
Per capita GDP
GDP per person. (331)
Inflation
the growth in the overall level of prices in an economy. (332)
Real GDP
GDP adjusted for changes in prices. (332)
Economic growth
the percentage change in real per capita GDP. (333)
Recession
a short‐term economic downturn. (333)
Great Recession
the U.S.recession that lasted from December 2007 to June 2009. (334)
Business cycle
a short‐run fluctuation in economic activity. (334)
Economic expansion
a phase of the business cycle during which economic activity is increasing. (334)
Economic contraction
a phase of the business cycle during which economic activity is decreasing. (334)
Services
outputs that provide benefits without producing a tangible product. (337)
Intermediate goods
goods that firms repackage or bundle with other goods for sale at a later stage. (338)
Final goods
goods sold to final users. (338)
Consumption
the purchase of final goods and services by households, excluding new housing. (340)
Investment
private spending on the tools, plant, and equipment used to produce future output. (340)
Government spending
spending by all levels of government on final goods and services. (341)
Exports
goods and services produced domestically but purchased and used abroad. (341)
Imports
goods and services produced abroad but purchased and used domestically. (341)
Net exports
total exports of final goods and services minus total imports of final goods and services. (341)
Nominal GDP
GDP measured in current prices and not adjusted for inflation. (341)
Price level
an index of the average prices of goods and services throughout the economy. (342)
School of thought
a cohesive way of thinking about a subject. (352)
Classical economics
a school of thought that emphasizes the importance of markets, limited government, and the supply side of the economy. (352)
Keynesian economics
a school of thought that emphasizes government intervention to limit the ups and downs of the market by focusing on the demand side of the economy. (352)
Laissez‐faire
‘allow to do” in French; a term that implies governments should allow firms to conduct their business without interference. (252)
Deficit spending
borrowing money in order to spend it. (353)
