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27 Cards in this Set

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What is National Income Accounting?
A system that collects statistics on production, income, investment, and savings.
NIC data are compiled and presented as National Income and Product Accounts (NIPA) & maintained by U.S. Dept. of Commerce.
What is Gross Domestic Product (GDP)?
The dollar value of all final goods and services produced within a country's borders in a calendar year.
Added up to calculate GDP; includes all Final Goods & Services sold to consumers
What are Intermediate Goods?
Goods used in the production of Final products.
Ex. nails, lumber, shingles, glass, etc. used in building a house
What are Durable Goods?
Those goods that last for a relatively long time.
Ex. refrigerators, cars, & CD players.
What are Nondurable Goods?
Those goods that last a short period of time
Ex. food, light bulbs & speakers
What is Nominal GDP?
GDP measured in current prices or "Current GDP"
To calculate nominal GDP use the current year's prices to calculate the value of the current year's input.
What is Real GDP?
GDP expressed in constant, or unchanging, prices.
used to correct the general increase in prices that appears to make GDP rise, when in fact it hasn't (a distortion )
What is the Gross National Product (GNP)?
The annual income earned by U.S. owned firms and U.S. Citizens both inside & outside the country.
A measure of the market value of all goods and services produced by Americans in one year.
What is Depreciation?
The loss of the value of capital equipment that results from normal wear and tear.
Cost of replacing this physical capital slightly reduces the value of what we produce = NNP
What is Net National Product (NNP)?
A measure of the net output for one year, or the output made after the adjustment for depreciation.
NNP doesn't reflect the cost of doing business: Taxes!
What is the Price Level?
The average of all prices in the economy.
calculated through the GDP
What is Aggregate Supply?
The total amount of goods and services in the economy available at all possible price levels.
Also called Real GDP or their production
What is Aggregate Demand?
The amount of goods and services in the economy that will be prchased at all possible price levels
An aggregate demand curve slopes downward from left to right showing the relationship between price and real GDP demanded.
What is a Business Cycle?
A period of macroeconomic expansion followed by a period of contracton.
Illustrated by a wave line showing expansion, peak, trough, contraction, etc.
What is an economic Expansion?
A period of economic growth as measured by a rise in real GDP.
The economy as a whole enjoys plentiful jobs, a falling unemployment rate, and business prosperity.
What is Economic Growth?
A steady,long-term increase in real GDP.
A phase of expansion when the whole economy enjoys plentiful jobs, falling unemployment & business prosperity
What is a Peak?
The height of economic expansion.
Noted when the real GDP stops rising.
What is a Trough?
The lowest point in an economic contraction, when real GDP stops falling.
When the economy "bottomed out" effected by price levels, unemployment in the business cycle
What is a Recession?
A prolonged economic contraction generally lasting from 6-8 months & marked by unemployment rising into a 6-10% range
If real GDP falls for two consecutive quarters (at least 6 consecutive months the economy is in a ___?____
What is a Depression?
A deep recession with features such as high unemployment and low factory output.
A long, severe economic recession.
What is Stagflation?
A decline in real GDP (output) combined with a rise in the price level (inflation).
derived from "stagnant" a word meaning unmoving or decayed- and "inflation"
What are Leading Indicators?
Key economic variables that economists use to predict a new phase of a business cycle
A tool used to predict business cycle phases
What is Real GDP Per Capita?
Real GDP divided by the total population. As long as GDP rises faster than the population, so too will the standard of living & ___?_____
"per capita" means "for each person & indicates standard of living
What is Capital Deepening?
The process of increasing the amount of capital per worker.
This comes with physical &/or human capital which increases worker's earnings.
What is Saving?
Income that is not used for consumption.
This process is equal to investment
What is the Savings Rate?
The proportion of disposable income that is saved
Higher ____ ____ leads to higher investment and thus to higher amounts of capital per worker
What is Technological Progress?
An increase in efficiency gained by producing more output without using more inputs.
This occurs through applied science/research, methodology for production, new inventions/machines, et.al.