Economics Chapter 12

Front 1

GDP (Gross Domestic Product)

Back 1

dollar value of all FINAL g/s produced WITHIN a country’s borders in a given YEAR

Front 2

Final goods

Back 2

products in the form sold to consumers

Front 3

intermediate goods

Back 3

used in the production of final goods

Front 4

Durable goods

Back 4

last for relatively long time

Front 5

nondurable goods

Back 5

last for short period of time (ie light bulbs)

Front 6

Nominal GDP

Back 6

GDP measured in current prices

Front 7

real GDP

Back 7

GDP expressed in constant prices

Front 8

GNP

Back 8

GDP plus income earned by outside US firms/citizens. Doesn’t include income made by foreign firms/countries located in US (unlike GDP)

Front 9

Depreciation

Back 9

loss of value of capital equipment that results from wear and tear

Front 10

Price level

Back 10

avg of all prices in an economy

Front 11

Aggregate supply

Back 11

total amount of g/s in an economy available at all possible price levels (like supply curve)

Front 12

Aggregate demand

Back 12

amount of g/s in the economy that will be purchased at all possible price levels

Front 13

Business cycle

Back 13

period of macroeconomic expansion followed by contraction period

Front 14

Expansion

Back 14

period of economic growth measured by GDP increase

Front 15

Economic growth

Back 15

steady, long term increases in GDP

Front 16

Peak

Back 16

height of economic expansion

Front 17

Contraction

Back 17

period of economic decline measured by falling GDP

Front 18

Recession

Back 18

2 quarters of declining GDP
declining demand
declining prices
increasing unemployment

Front 19

Depression

Back 19

prolonged recession

Front 20

Stagflation

Back 20

declining GDP
increasing prices
increasing unemployment

Front 21

Leading indicators

Back 21

key economic variables economists use to predict a new phase of a business cycle (ie stock market, interest rates)

Front 22

Real GDP per capita

Back 22

real GDP divided by total population; best measure of nation’s standard of living; bt doesn’t show how evenly distributed

Front 23

Capital deepening

Back 23

process of increasing real GDP per capita

Front 24

Savings rate

Back 24

disposable income that’s saved

Front 25

Technological progress

Back 25

increase in efficiency gained by producing more output w/o using more inputs= higher real GDP per capita= higher standard of living

Front 26

National income accounting

Back 26

system that collects macroeconomic stats on production

Front 27

Describe 1973 OPEC

Back 27

stagflation
increased oil prices b/c US supported Israel.
external shock

Front 28

Keynesian economics

Back 28

John Maynard Keynes
govt should make jobs- overall, didn't really help
FDR

Front 29

Supply Side economics

Back 29

ex: Reagan, Thatcher
deregulate, reduce taxes

Front 30

airlines 50s-80s

Back 30

govt controls airlines so all the same, stifling competition.
Regan deregulated, airlines went under+lost jobs, but more innovation and more started flying b/c cheaper.

Front 31

calculating inflation rate

Back 31

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