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45 Cards in this Set

  • Front
  • Back
national income and product accounts
Data collected and published by the government describing the various components of national income and output in the economy.
gross domestic product (GDP)
The total market value of all final goods and services produced within a given period by factors of production located within a
final goods and services
Goods and services produced for final use.
intermediate goods
Goods that are produced by one firm for use in further processing by another firm.
value added
The difference between the value of goods as they leave a stage of production and the cost of the goods as they entered that stage
gross national product (GNP)
The total market value of all final goods and services produced within a given period by factors of production owned by a country’s citizens, regardless of where the output is produced.
expenditure approach
A method of computing GDP that measures the amount spent on all final goods during a given period.
income approach
A method of computing GDP that measures the income—wages, rents, interest, and profits—received by all factors of production in producing final goods.
C + I + G + (EX - IM)
personal consumption expenditures (C)
A major component of GDP: expenditures by consumers on goods and services.
durable goods
Goods that last a relatively long time, such as cars and household appliances.
nondurable goods
Goods that are used up fairly quickly, such as food and clothing.
The things we buy that do not involve the production of physical things,
such as legal and medical services and education.
gross private domestic investment (I)
Total investment in capital—that is,
the purchase of new housing, plants, equipment, and inventory by the private (or nongovernment) sector.
nonresidential investment
Expenditures by firms for machines, tools, plants, and so on.
residential investment
Expenditures by households and firms on new houses and apartment buildings.
change in business inventories
The amount by which firms’ inventories change during a period. Inventories are
the goods that firms produce now but intend to sell later.
The amount by which an asset’s value falls in a given period.
gross investment
The total value of all newly produced capital goods (plant, equipment, housing, and inventory) produced in a given period.
net investment
Gross investment minus depreciation.
government consumption and gross
investment (G)
Expenditures by federal, state, and local governments for final goods and services.
net exports (EX - IM)
The difference between exports (sales to foreigners of U.S.- produced goods and services) and imports (U.S. purchases of goods and services from abroad). The figure can be positive or negative.
national income
The total income earned by the factors of production owned by a country’s citizens.
compensation of employees
Includes wages, salaries, and various supplements—employer contributions to social insurance and pension funds, for example—paid to households by firms and by the government.
proprietors’ income
The income of unincorporated businesses.
rental income
The income received by property owners in the form of rent.
corporate profits
The income of corporate businesses.
net interest
The interest paid by business.
indirect taxes minus subsidies
Taxes such as sales taxes, customs duties, and license fees, less subsidies that the government pays for which it receives no goods or services in return.
net business transfer payments
Net transfer payments by businesses to
surplus of government enterprises
Income of government enterprises.
net national product (NNP)
Gross national product minus depreciation; a nation’s total product minus what is
required to maintain the value of its capital stock.
statistical discrepancy
Data measurement error.
personal income
The total income of households before paying personal income taxes.
disposable personal income or after-tax income
Personal income minus personal income taxes. The amount that households have to spend or save.
personal saving
The amount of disposable income that is left after total personal spending in a given period.
personal saving rate
The percentage of disposable personal income that is saved. If the personal saving rate is low,
households are spending a large amount relative to their incomes; if it is high, households are spending cautiously.
current dollars
The current prices that one pays for goods and services.
nominal GDP
Gross domestic product measured in current dollars.
The importance attached to an item within a group of items.
base year
The year chosen for the weights in a fixed-weight procedure.
fixed-weight procedure
A procedure that uses weights from a given base year.
The use of fixed-price weights to estimate real GDP leads to problems because it ignores:
Structural changes in the economy.

Supply shifts, which cause large decreases in price and large increases in quantity supplied.

The substitution effect of price increases.
underground economy
The part of the economy in which transactions take place and in which income is generated that is unreported and therefore not
counted in GDP.
gross national income (GNI)
GNP converted into dollars using an average of currency exchange rates over several years adjusted for rates of inflation.