Key Terms

Question 0

Exports

Answer 0

Goods that are produce domestically but sold abroad

Question 1

Inventories

Answer 1

Goods held by a firm for future production or sale

Question 2

Final goods

Answer 2

Goods purchased by the ultimate user - consumer goods bought by households or machinery purchased by firms

Question 3

GNP per capita

Answer 3

GNP/total population

Question 4

Macroeconomics

Answer 4

The study of the economy as a whole

Question 5

Saving

Answer 5

Part of income not spent buying goods and services

Question 6

Depreciation

Answer 6

Measurement of rate at which existing capital stock declines per period as a results of wear and tear or of obsolescence

Question 7

Factor cost*

Answer 7

A way of valuing domestic output exclusive of indirect taxes on goods and services

Question 8

Current prices

Answer 8

A valuation of expenditures or output using the prices prevailing at the time of measurement

Question 9

Intermediate goods

Answer 9

Partly formed goods which form inputs into another firm’s production process and are used up in that process

Question 10

Constant prices*

Answer 10

A valuation of expenditures or output using the prices prevailing at some base year

Question 11

Open economy

Answer 11

An economy which has transactions with other countries

Question 12

Closed economy

Answer 12

An economy which does not transact with the rest of the world

Question 13

Personal disposable income

Answer 13

Household income after direct taxes and transfer payments: the amount that households have available for spending and saving

Question 14

Net economic welfare*

Answer 14

A measurement of national output which adjusts GNP for the net value of non-market activities and leisure

Question 15

Value added*

Answer 15

The increase in the value of goods as a result of the production process

Question 16

GNP deflator

Answer 16

The ratio of nominal GNP to real GNP expressed as an index

Question 17

Investment

Answer 17

The purchase of new capital goods by firms

Question 18

Imports

Answer 18

Goods produced abroad but purchased for use in the domestic economy

Question 19

GDP

Answer 19

The output produced by factors of production located in the domestic economy, regardless of who owns these factors

Question 20

National income

Answer 20

The economy’s net national product valued at factor cost

Question 21

Market prices

Answer 21

A way of valuing domestic output inclusive of indirect taxes on goods and services

Question 22

Net property income from abroad*

Answer 22

The excess of inflows of property income from factor services supplied abroad over the outflows of property income arising from the supply of factor services by foreigners in the domestic economy