Key Terms Flashcards
Exports
Goods that are produce domestically but sold abroad
Inventories
Goods held by a firm for future production or sale
Final goods
Goods purchased by the ultimate user - consumer goods bought by households or machinery purchased by firms
GNP per capita
GNP/total population
Macroeconomics
The study of the economy as a whole
Saving
Part of income not spent buying goods and services
Depreciation
Measurement of rate at which existing capital stock declines per period as a results of wear and tear or of obsolescence
Factor cost*
A way of valuing domestic output exclusive of indirect taxes on goods and services
Current prices
A valuation of expenditures or output using the prices prevailing at the time of measurement
Intermediate goods
Partly formed goods which form inputs into another firm’s production process and are used up in that process
Constant prices*
A valuation of expenditures or output using the prices prevailing at some base year
Open economy
An economy which has transactions with other countries
Closed economy
An economy which does not transact with the rest of the world
Personal disposable income
Household income after direct taxes and transfer payments: the amount that households have available for spending and saving
Net economic welfare*
A measurement of national output which adjusts GNP for the net value of non-market activities and leisure
Value added*
The increase in the value of goods as a result of the production process
GNP deflator
The ratio of nominal GNP to real GNP expressed as an index
Investment
The purchase of new capital goods by firms
Imports
Goods produced abroad but purchased for use in the domestic economy
GDP
The output produced by factors of production located in the domestic economy, regardless of who owns these factors
National income
The economy’s net national product valued at factor cost
Market prices
A way of valuing domestic output inclusive of indirect taxes on goods and services
Net property income from abroad*
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
