Quiz One Flashcards
Capital goods
Businesses, machines, technology, and tools needed to produce goods and services
Intermediate goods
Goods used in the production of final goods
Final goods
goods and services that have been purchased for final use and not for resale or further processing or manufacturing
Real GDP
the production of goods and services valued at constant prices
rGDP calculation
base year prices * current year quantities
nominal GDP
the production of goods and services valued at current prices
nGDP calculation
current quantities * current prices
rGDP measures
changes in the quantity of goods and services produced in the economy and overall economic growth
nGDP measures
changes in price from year to year
investment
spending on inventory increase, new homes, or purchased final goods
GDP deflator
uses rGDP and nGDP to measure the average price of all goods and services in the economy
GDP deflator formula
Nominal GDP/Real GDP * 100
3 ways to measure GDP
spending approach, income approach, production approach
limitations of GDP
non market activities, underground economy, negative externalities, quality of life
current rGDP
$19.7 trillion
