Unit 2 Vocabulary Flashcards
keep track of the flows of money among different sectors of the economy
national income and product accounts or national accounts
a person or group of people who share income
household
an organization that produces goods and services for sale
firm
goods and services are bought and sold here
product markets
household spending on goods and services
consumer spending
where resources, especially capital and labor, are bought and sold
factor markets
total expenditures on goods and services by federal, state, and local governments
government spending
required payments to the government
taxes
the total amount the government receives from taxes
tax revenue
equal to income plus government transfers minus taxes, is the total amount of household income available to spend on consumption
disposable income
payments that the government makes to individuals without expecting a good or service in return
government transfers
equal to disposable income minus consumer spending, is a household’s disposable income that is not spent on consumption
private savings
channel private savings into investment spending and government borrowing
financial markets
the amount of funds borrowed by the government in the financial markets
government borrowing
spending on new productive physical capital, such as machinery and structures, and on changes in inventories
investment spending
stocks of goods and raw materials held to facilitate business operations
inventories
goods and services sold to other countries
exports
goods and services purchased from other countries
imports
the total value of all final goods and services produced in the economy during a given year
GDP
adds up aggregate spending on domestically produced final goods and services in the economy-the sum of consumer spending, investment spending, government purchases of goods and services, and exports minus imports
expenditure approach
adds up the total factor income earned by households from firms in the economy, including rent, wages, interest, and profit
income approach
surveys firms and adds up their contributions to the value of the final goods and services
value added approach
goods and services sold to the final, or end, user
final goods and services
goods and services bought from one firm by another firm to be used as inputs into the production of final goods and services
intermediate goods and services
the difference between the value of exports and imports (X - M)
net exports
added by a producer is the value of its sales minus the value of its purchases of inputs
value added
the total quantity of final goods and services produced within an economy
aggregate output
the total value of all final goods and services produced in the economy during a given year, calculated using the prices of a selected base year in order to remove the effects of price changes
Real GDP
the total value of all final goods and services produced in the economy during a given year, calculated with the prices current in the year in which the output is produced
nominal GDP
