Key terms - Measuring GDP and economic growth Flashcards
Business cycle
A periodic but irregular up-and-down movement of total production and other measures of economic activity.
Exports
Selling goods and services to the rest of the world.
Depreciation
The decrease in the value of a firm’s capital that results from wear and tear and obsolescence.
Gross domestic product (GDP)
The market value of all final goods and services produced within a country in a given time period - usually a year.
Gross investment
The total amount spent on purchases of new capital and on replacing depreciated capital.
Imports
Buying goods and services from the rest of the world.
Intermediate good
An item that is produced by one firm, bought by another firm, and used as a component of a final good/service.
Investment
The purchase of new plant, equipment, and buildings.
Net exports
The value of exports (X) minus the value of imports (M).
Net investment
The amount by which the value of the firm’s capital increases.
Nominal GDP
The value of final goods and services produced in a given year when valued at the prices of that year.
Potential GDP
The value of production when all the economy’s labour, capital, land and entrepreneurial ability are fully employed.
Real GDP
The value of all final goods an services produced in a given year when valued at the prices of that year.
Recession
A period during which real GDP decreases.
