Unit I & II vocab Flashcards
Gross domestic product (GDP)
The market value of all final goods and services produced within a country during a specific period.
Intermediate goods
Goods purchased for resale or for use in producing another good or service.
Final market goods and services
Goods and services purchased by their ultimate user.
Expenditure approach to derive GDP
Total the expenditures on goods and services produced during the year
Resource cost-income approach to derive GDP
Sum the income payments to resource suppliers of all things used to produce those goods or services.
Personal consumption
Household spending on consumer goods and services during the current period. Consumption is a flow concept.
Private investment
The flow of private-sector expenditures on durable assets (fixed investments) plus the addition of inventories (inventory investments) during a period. The expenditures enhance our ability to provide consumer benefits in the future.
Depreciation
The estimated amount of physical capital (for example, machines and buildings) that is worn out or used up producing goods during a period.
Inventory investments
Changes in the stock of unsold goods and raw materials held during a period.
Net exports
Exports minus imports
Exports
Good and services produced domestically but sold to foreigners
Imports
Good and services produced by foreigners but purchased by domestic consumers, businesses and governments.
Indirect business taxes
Taxes that increase a business firm’s costs of production and, therefore, the price charged to consumers. Examples are sales, excise, and property taxes.
National income
The total income earned by a country’s nationals (citizens) during a period. It is the sum of employee compensation, self-employment income, rents, interest, and corporate profits.
Gross national product
The total market value of all final goods and services produced by the citizens of a country. It is equal to the GDP minus the net income of foreigners.
Net income of foreigners
The income of foreigners earn by contributing labor and capital resources to the production of goods within the borders of a country minus the income the nationals of the country earn abroad.
Nominal values
Values expressed in current dollars. Often call money values.
Real values
Values that have been adjusted for the effects of inflation.
Consumer price index (CPI)
An indicator of the general level of prices. It attempts to compare the cost of purchasing the market basket bought by a typical consumer during a specific period with the cost of purchasing the same market basket during an earlier period.
Chained consumer price index
A measure of the consumer price index that accounts for changes in the market basket of goods bought on a monthly basis rather than on a lagged basis as done with the traditional CPI. This change reduces the annual inflation rate by 0.2 to 0.3 percentage points.
GDP deflator
A price index that reveals the cost during the current period of purchasing the items included in the GDP relative to the cost during a base year (currently 2012). Unlike the consumer price index (CPI), the GDP deflator also measures the prices of capital goods and other goods and services purchased by businesses and governments.
Inflation
An increase in the general level of prices of goods and services. The purchasing power of the monetary unit, such as the dollar, declines when inflation is present.
Nominal GDP
GDP expressed at current prices. It is often called money GDP.
Real GDP
GDP adjusted for changes in the price level.