Macroecon Chapter 24

Front 1

national income accounting

Back 1

consists of concepts that enable those who use them to measure the economies output to compare it with past outputs to explain its size and the reasons for change in its size and to formulate policies designed to increase it

Front 2

gross domestic product GDP

Back 2

the market value of all final goods and services produced in the domestic economy during the year is measured

Front 3

final goods

Back 3

consumption goods capital goods and services purchased by final users and that will not be resold or processed further during the current year

Front 4

intermediate goods

Back 4

ones that are purchased for resale or further processing

Front 5

multiple counting

Back 5

of the goods and overstate GDP

Front 6

value added

Back 6

at each stage of the production process

Front 7

expenditures approach

Back 7

requires the summation of the total amounts of the four types of spending for final goods and services

Front 8

personal consumption expenditures

Back 8

are the expenditures of household for durable goods and nondurable goods and for services

Front 9

Gross private domestic investment

Back 9

is the sum of the spending by business firms for machinery, equipment, and tools, spending by firms and households for new construction and the changes in the inventories of business firms.

Front 10

government purchases

Back 10

are the expenditures made by all levels of governments for final goods from businesses, and for the direct purchases of resources including labor.

Front 11

net exports (Xn)

Back 11

in an economy is calculated as the difference between exports and imports it is equal to the expenditures made by foreigners for goods and services produced in the economy minus the expenditures made by the consumers, governments, and investors of the economy for goods services produced in foreign nations.

Front 12

C+Ig+G+Xn= GDP

Back 12

C=personal consumption
I= gross private domestic investmet
G= are the expenditures made by all levels of government
Xn= in an economy is calculated as the difference between exports

Front 13

income approach

Back 13

requires adding the income derived from the production and sales of final goods and services.

Front 14

Taxes on production and imports

Back 14

are added because they are initially income for households that later gets paid to government in the form of taxes .

Front 15

consumption of fixed capital

Back 15

is added to national income to get GDP because it is a cost of production that doe not add to anyones income

Front 16

Net domestic product

Back 16

is the annual output of final goods and services over and above the privately and publicly owned capital goods worn out during the year

Front 17

national income

Back 17

is the total income earned by US owners of land and capital and by the US suppliers of labor and entrepreneurial ability during the year plus taxes on production and imports

Front 18

personal income

Back 18

is the total income received whether it is earned or unearned

Front 19

disposable income

Back 19

is the total income available to households after the payment of personal taxes

Front 20

nominal GDP

Back 20

is the total output of final goods and services produced by an economy in one year multiplied by the market prices when they were produced.

Front 21

real gdp

Back 21

to account for these price changes

Front 22

price index

Back 22

the price of a market basket in a given year