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27 Cards in this Set
- Front
- Back
- 3rd side (hint)
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What is National Income Accounting?
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A system that collects statistics on production, income, investment, and savings.
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NIC data are compiled and presented as National Income and Product Accounts (NIPA) & maintained by U.S. Dept. of Commerce.
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What is Gross Domestic Product (GDP)?
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The dollar value of all final goods and services produced within a country's borders in a calendar year.
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Added up to calculate GDP; includes all Final Goods & Services sold to consumers
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What are Intermediate Goods?
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Goods used in the production of Final products.
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Ex. nails, lumber, shingles, glass, etc. used in building a house
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What are Durable Goods?
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Those goods that last for a relatively long time.
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Ex. refrigerators, cars, & CD players.
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What are Nondurable Goods?
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Those goods that last a short period of time
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Ex. food, light bulbs & speakers
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What is Nominal GDP?
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GDP measured in current prices or "Current GDP"
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To calculate nominal GDP use the current year's prices to calculate the value of the current year's input.
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What is Real GDP?
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GDP expressed in constant, or unchanging, prices.
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used to correct the general increase in prices that appears to make GDP rise, when in fact it hasn't (a distortion )
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What is the Gross National Product (GNP)?
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The annual income earned by U.S. owned firms and U.S. Citizens both inside & outside the country.
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A measure of the market value of all goods and services produced by Americans in one year.
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What is Depreciation?
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The loss of the value of capital equipment that results from normal wear and tear.
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Cost of replacing this physical capital slightly reduces the value of what we produce = NNP
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What is Net National Product (NNP)?
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A measure of the net output for one year, or the output made after the adjustment for depreciation.
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NNP doesn't reflect the cost of doing business: Taxes!
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What is the Price Level?
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The average of all prices in the economy.
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calculated through the GDP
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What is Aggregate Supply?
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The total amount of goods and services in the economy available at all possible price levels.
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Also called Real GDP or their production
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What is Aggregate Demand?
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The amount of goods and services in the economy that will be prchased at all possible price levels
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An aggregate demand curve slopes downward from left to right showing the relationship between price and real GDP demanded.
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What is a Business Cycle?
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A period of macroeconomic expansion followed by a period of contracton.
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Illustrated by a wave line showing expansion, peak, trough, contraction, etc.
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What is an economic Expansion?
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A period of economic growth as measured by a rise in real GDP.
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The economy as a whole enjoys plentiful jobs, a falling unemployment rate, and business prosperity.
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What is Economic Growth?
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A steady,long-term increase in real GDP.
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A phase of expansion when the whole economy enjoys plentiful jobs, falling unemployment & business prosperity
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What is a Peak?
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The height of economic expansion.
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Noted when the real GDP stops rising.
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What is a Trough?
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The lowest point in an economic contraction, when real GDP stops falling.
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When the economy "bottomed out" effected by price levels, unemployment in the business cycle
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What is a Recession?
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A prolonged economic contraction generally lasting from 6-8 months & marked by unemployment rising into a 6-10% range
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If real GDP falls for two consecutive quarters (at least 6 consecutive months the economy is in a ___?____
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What is a Depression?
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A deep recession with features such as high unemployment and low factory output.
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A long, severe economic recession.
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What is Stagflation?
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A decline in real GDP (output) combined with a rise in the price level (inflation).
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derived from "stagnant" a word meaning unmoving or decayed- and "inflation"
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What are Leading Indicators?
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Key economic variables that economists use to predict a new phase of a business cycle
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A tool used to predict business cycle phases
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What is Real GDP Per Capita?
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Real GDP divided by the total population. As long as GDP rises faster than the population, so too will the standard of living & ___?_____
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"per capita" means "for each person & indicates standard of living
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What is Capital Deepening?
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The process of increasing the amount of capital per worker.
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This comes with physical &/or human capital which increases worker's earnings.
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What is Saving?
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Income that is not used for consumption.
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This process is equal to investment
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What is the Savings Rate?
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The proportion of disposable income that is saved
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Higher ____ ____ leads to higher investment and thus to higher amounts of capital per worker
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What is Technological Progress?
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An increase in efficiency gained by producing more output without using more inputs.
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This occurs through applied science/research, methodology for production, new inventions/machines, et.al.
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