Module 7 Gross Domestic Product- Vocab

Question 1

Balance of Payments

Answer 1

The accounting ledger of a country’s international transactions showing all transactions of financial assets and goods or services.

Question 2

Business Cycle

Answer 2

The trend of economies to move through cycles of expansion to contraction and back to expansion.

Question 3

Capital Account

Answer 3

Within the Balance of Payments accounting system, the record of a country’s capital and financial assets transactions.

Question 4

Capital Investment

Answer 4

Spending by firms on buildings, factories, commercial space, warehouses, and equipment that is used to produce goods, services and residential housing.

Question 5

Capital Utilization rate

Answer 5

The proportion of the production capacity of an economy currently in use.

Question 6

Consumer Spending

Answer 6

Purchases of goods and services by households.

Question 7

Current Account

Answer 7

Within the Balance of Payments accounting system, the record of a country’s imports and exports of goods and services, investment income, and transfer payments.

Question 8

Depreciation

Answer 8

The process by which capital ages and loses value.

Question 9

Economic Growth

Answer 9

An increase in real GDP in the current period from the preceding period.

Question 10

Exports

Answer 10

Purchases of domestically produced products and services by persons and companies outside the country as well as foreign government purchases.

Question 11

Final good

Answer 11

A good purchased and used at the final stage of consumption.

Question 12

A good purchased and used at the final stage of consumption.

Answer 12

A statistic used to measure the extent of income equality.

Question 13

Government expenditures

Answer 13

Spending by all levels of government: federal, state, and local.

Question 14

Gross Domestic Product

Answer 14

The value of all final goods and services produced by an economy in a given year.

Question 15

Net Domestic Product

Answer 15

The value of all final goods and services produced by an economy accounting for depreciation in productive capacity.

Question 16

Nominal Gross Domestic Product

Answer 16

The non-inflation adjusted value of all final goods and services produced by an economy in a given year.

Question 17

Per Capita GDP

Answer 17

Real Gross Domestic Product divided by the population.

Question 18

Potential Gross Domestic Product

Answer 18

The level of production of goods and services an economy produces when its workforce is at full employment and capital stock is utilized at an optimally efficient level.

Question 19

Radical Economics

Answer 19

An economic theory that rejects economic growth as a concern of Macroeconomics, and argues instead for sustainability and quality of life.

Question 20

Real Gross Domestic Product

Answer 20

The value of all final goods and services produced by an economy in a given year adjusted for inflation.

Question 21

Recession

Answer 21

A significant decline in real GDP across multiple sectors of the economy over an extended period of time accompanied by high unemployment.

Question 22

Trade Deficit

Answer 22

The situation when a country imports more goods and services than it exports.

Question 23

Underground economy

Answer 23

Production of goods and services that is not reported.