Principles Of Economics Chapter 18

Front 1

Base Year

Back 1

A base year is the year chosen for the weights in a fixed-weight procedure.

Front 2

Current Dollars

Back 2

The current prices that one pays for goods and services

Front 3

Depreciation

Back 3

The amount by which an asset's value falls in a given period

Front 4

Disposable personal income

Back 4

(after tax income) Personal income minus personal income taxes. The amount that households have to spend or save

Front 5

Durable Goods

Back 5

goods that last a relatively long time, such as cars and household appliances.

Front 6

Expenditure Approach

Back 6

A method of computing GDP that measures the amount spent on all final goods during a given period

Front 7

Final Goods and Services

Back 7

Goods and services produced for final use

Front 8

Fixed-Weight procedure

Back 8

A procedure that uses weights from a given base year

Front 9

Government Consumption and Gross Investment

Back 9

(G) Expenditures by federal, state, and local governments for final goods and services

Front 10

Gross Domestic Product (GDP)

Back 10

The total market value of all final goods and services produced within a given period by factors of production located within a country

Front 11

Gross National Product

Back 11

(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

Front 12

Gross Private Domestic Investment

Back 12

(I) Total investment in capital - that is, the purchase of new housing, plants, equipment, and inventory by the private (or nongovernment) sector

Front 13

Income Approach

Back 13

A method of computing GDP that measures the income - wages, rents, interest, and profits - received by all factors of production in producing final goods.

Front 14

Intermediate Goods

Back 14

Goods that are produced by one firm for use in further processing by another firm

Front 15

National Income

Back 15

The total income earned by the factors of production owned by a country's citizens

Front 16

Net Exports

Back 16

(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.

Front 17

Net Factor Payments to the Rest of the World

Back 17

Payments of factor income to the rest of the world minus the receipt of factor income from the rest of the world

Front 18

Net Interest

Back 18

The interest paid by business

Front 19

Net Investment

Back 19

Gross investment minus depreciation

Front 20

Nominal GDP

Back 20

Gross domestic product measured in current dollars

Front 21

Nondurable Goods

Back 21

Goods that are used up fairly quickly, such as food and clothing

Front 22

Per Capita GDP or GNP

Back 22

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Front 23

Personal Consumption Expenditures

Back 23

(C) A major component of GDP: expenditures by consumers on goods and services

Front 24

Personal Income

Back 24

The total income of households. Equals (national income) minus (corporate profits minus dividends) minus (social insurance payments) plus (interest income received from the government and households) plus (transfer payments to households). The income received by households after paying social insurance taxes but before paying personal income taxes.

Front 25

Personal Saving

Back 25

The amount of disposable income that is left after total personal spending in a given period

Front 26

Services

Back 26

The things we buy that do not involve the production of physical things such as legal and medical services and education.

Front 27

Subsidies

Back 27

Payments made by the government for which it receives no goods or services in return

Front 28

Underground Economy

Back 28

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

Front 29

Value Added

Back 29

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

Front 30

Weight

Back 30

The importance attached to an item within a group of items

Front 31

GDP =

Back 31

1) C + I + G + (EX-IM)
2) Final sales + change in business inventories
3) National income + Depreciation + (indirect taxes - subsidies) + net factor payments to the rest of the world + Other

Front 32

Changes in BEA Approach for determining GDP Deflator (not fixed-weight)

Back 32

1) Using Both time periods being compared as base years
2) Geometric Average of the % change using the 2 time periods being compared each as a base year