Ch. 7-8

Front 1

national income accounting

Back 1

the technique used to measure the overall production of the economy and other related variables for the nation as a whole

Front 2

gross domestic product (GDP)

Back 2

the total market value of all final goods and services produced annually within the boundaries of the United States, whether by U.S.- or foreign-supplied resources

Front 3

intermediate goods

Back 3

products that are purchased for resale or further processing of manufacturing

Front 4

final goods and services

Back 4

goods and services that have been purchased for final use and not for resale or further processing or manufacturing

Front 5

multiple counting

Back 5

wrongly including the value or intermediate goods in the gross domestic product; counting the same good or service more than once

Front 6

value added

Back 6

the value of the product sold by a firm less the value of the product (materials) purchased and used by the firm to produce the product

Front 7

expenditures approach

Back 7

the method that adds all expenditures made for final goods and services to measure the gross domestic product

Front 8

income approach

Back 8

the method that adds all the income generated by the production of final goods and services to measure the gross domestic product

Front 9

personal consumption expenditures (C)

Back 9

the expenditures of households for durable and nondurable consumer goods and services

Front 10

gross private domestic investment (Ig)

Back 10

expenditures for newly produced capital goods (i.e. machinery, equipment, tools, and buildings) and for additions to inventories

Front 11

net private domestic investment

Back 11

gross private domestic investment less consumption of fixed capital; the addition to the nation's stock of capital during a year

Front 12

gov't purchases (G)

Back 12

expenditures by gov't for goods and services that gov't consumes in providing public goods and for the public (or social) capital that has a long lifetime; the expenditures of all gov'ts in the economy for those final goods and services

Front 13

net exports (Xn)

Back 13

Exports minus imports

Front 14

taxes on production and imports

Back 14

a national income accounting category that includes such taxes as sales, excise, business property taxes, and tariffs which firms treat as costs of producing a product and pass on(in whole or in part) to buyers by charging a higher price

Front 15

national income

Back 15

total income earned by resource suppliers for their contributions to GDP plus taxes on production and imports; the sum of wages and salaries, rent, interest, profit, proprietors' income, and such taxes

Front 16

consumption of fixed capital

Back 16

an estimate of the amount of capital worn out or used up (consumed) in producing the GDP; also called depreciation

Front 17

net domestic product (NDP)

Back 17

GDP less the part of the year's output that tis needed to replace the capital goods worn out in producing the output; the nation's total output available for consumption or additions to the capital stock

Front 18

personal income (PI)

Back 18

the earned and unearned income available to resource suppliers and others before the payment of personal taxes

Front 19

disposable income (DI)

Back 19

personal income less personal taxes; income available for personal consumption expenditures and personal savings

Front 20

nominal GDP

Back 20

the GDP measured in terms of the price level at the time of measurement (unadjusted for inflation)

Front 21

real GDP

Back 21

GDP adjusted for inflation; gross domestic product in a year divided by the GDP price index for that year, the index expressed as a decimal

Front 22

price index

Back 22

and index number that shows how the weighted-average price of a "market basket" of goods changes over time

Front 23

economic growth

Back 23

1) and outward shift in the production possibilities curve that results from an increase in resource supplies or quality or an improvement in technology; 2) an increase of real output (GDP) or real output per capita

Front 24

real GDP per capita

Back 24

inflation-adjusted output per person; real GDP/population

Front 25

rule of 70

Back 25

a method for determining the number of years it will take for some measure to double, given its annual percentage increase. Example: to determine the number of years it will take for the price level to double, divide 70 by the annual rate of inflation

Front 26

modern economic growth

Back 26

the historically recent phenomenon in which nations for the first time have experienced sustained increases in real GDP per capita

Front 27

leader countries

Back 27

as it relates to economic growth, countries that develop and use advanced technologies, which then become available to follower countries

Front 28

follower countries

Back 28

as it relates to economic growth, countries that adopt advanced technologies that previously were developed and used by leader countries

Front 29

supply factors (in growth)

Back 29

an increase in the availability of a resource, an improvement in its quality, or an expansion of technological knowledge that makes it possible for an economy to produce a greater output of goods and services

Front 30

demand factor (in growth)

Back 30

the increase in the level of aggregate demand that brings about the economic growth made possible by an increase in the production potential of the economy

Front 31

efficiency factors (in growth)

Back 31

the capacity of an economy to combine resources effectively to achieve growth of real output that the supply factors (of growth) make possible

Front 32

labor productivity

Back 32

total output divided by the quantity of labor employed to produce it; the average product of labor or output per hour of work

Front 33

labor-force participation rate

Back 33

the percentage of the working-age population that is actually in the labor force

Front 34

growth accounting

Back 34

the bookkeeping of the supply-side elements such as productivity and labor inputs that contribute to changes in real GDP over some specific time period

Front 35

infrastructure

Back 35

the capital goods usually provided by the public sector for the use of its citizens and firms (for example, highways, bridges, transit systems, wastewater treatment facilities, municipal water systems , and airports)

Front 36

human capital

Back 36

the knowledge and skills that make a person productive

Front 37

economies of scale

Back 37

reductions in the average total cost of producing a product as a firm expands the size of plant (its output) in the long run; the economies of mass production

Front 38

information technology

Back 38

new and more efficient methods of delivering and receiving information through use of computers, fax machines, wireless phones, and the Internet

Front 39

start-up (firm)

Back 39

a new firm focused on creating and introducing a particular new product or employing a specific new production or distribution method

Front 40

increasing returns

Back 40

an increase in a firm's output by a larger percentage than the percentage increase in its inputs

Front 41

network effects

Back 41

increases in the value of a product to each user, including existing users, as the total number of users rises

Front 42

learning by doing

Back 42

achieving greater productivity and lower average total cost through gains in knowledge and skill that accompany repetition of a task; a source of economies of scale