FlashcardsChapter12

Question 1

Term

Answer 1

Description

Question 2

Gross domestic product (GDP)

Answer 2

the market value of all final goods and services produced within a country during a specific period. (330)

Question 3

Per capita GDP

Answer 3

GDP per person. (331)

Question 4

Inflation

Answer 4

the growth in the overall level of prices in an economy. (332)

Question 5

Real GDP

Answer 5

GDP adjusted for changes in prices. (332)

Question 6

Economic growth

Answer 6

the percentage change in real per capita GDP. (333)

Question 7

Recession

Answer 7

a short‐term economic downturn. (333)

Question 8

Great Recession

Answer 8

the U.S.recession that lasted from December 2007 to June 2009. (334)

Question 9

Business cycle

Answer 9

a short‐run fluctuation in economic activity. (334)

Question 10

Economic expansion

Answer 10

a phase of the business cycle during which economic activity is increasing. (334)

Question 11

Economic contraction

Answer 11

a phase of the business cycle during which economic activity is decreasing. (334)

Question 12

Services

Answer 12

outputs that provide benefits without producing a tangible product. (337)

Question 13

Intermediate goods

Answer 13

goods that firms repackage or bundle with other goods for sale at a later stage. (338)

Question 14

Final goods

Answer 14

goods sold to final users. (338)

Question 15

Consumption

Answer 15

the purchase of final goods and services by households, excluding new housing. (340)

Question 16

Investment

Answer 16

private spending on the tools, plant, and equipment used to produce future output. (340)

Question 17

Government spending

Answer 17

spending by all levels of government on final goods and services. (341)

Question 18

Exports

Answer 18

goods and services produced domestically but purchased and used abroad. (341)

Question 19

Imports

Answer 19

goods and services produced abroad but purchased and used domestically. (341)

Question 20

Net exports

Answer 20

total exports of final goods and services minus total imports of final goods and services. (341)

Question 21

Nominal GDP

Answer 21

GDP measured in current prices and not adjusted for inflation. (341)

Question 22

Price level

Answer 22

an index of the average prices of goods and services throughout the economy. (342)

Question 23

School of thought

Answer 23

a cohesive way of thinking about a subject. (352)

Question 24

Classical economics

Answer 24

a school of thought that emphasizes the importance of markets, limited government, and the supply side of the economy. (352)

Question 25

Keynesian economics

Answer 25

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)

Question 26

Laissez‐faire

Answer 26

‘allow to do” in French; a term that implies governments should allow firms to conduct their business without interference. (252)

Question 27

Deficit spending

Answer 27

borrowing money in order to spend it. (353)