Chapter 12: Gross Domestic Product and Growth
National Income Accounting.
a system that collects macroeconomic statistics on production, income, investment, and savings
Leading Indicators
key economic variables that economists use to predict a new phase of a business cycle
Capital Deepening
process of increasing the amount of capital per worker
Real GDP Per Capita
real GDP divided by the total population
Aggregate Demand
the amount of goods and services in the economy that will be purchased at all possible price levels
Gross National Product (GNP)
the annual income earned by U.S.-owned firms and U.S. citizens
Price Level
the average of all prices in the economy
Gross Domestic Product.
the dollar value of all final goods and services produced within a country's borders in a given year
Peak
the height of an economic expansion, when real GDP stops rising
Depreciation
the loss of the value of capital equipment that results from normal wear and tear
Trough
the lowest point in an economic contraction, when real GDP stops falling
Savings Rate
the proportion of disposable income that is saved
Aggregate Supply
the total amount of goods and services in the economy available at all possible price levels
Real GDP
GDP expressed in constant, or unchanging, prices
Nominal GDP
GDP measured in current prices
Stagflation
a decline in real GDP combined with a rise in the price level
Contraction
a period of economic decline marked by falling real GDP
Expansion
a period of economic growth as measured by a rise in real GDP
Business Cycle
a period of macroeconomic expansion followed by a period of contraction
Recession
a prolonged economic contraction
Depression
a recession that is especially long and severe
Economic Growth
a steady, long-term increase in real GDP
Technological Progress
an increase in efficiency gained by producing more output without using more inputs
Non-durable Goods
goods that last a short period of time, such as food, light bulbs, and sneakers
Durable Goods.
goods that last for a relatively long time, such as refrigerators, cars, and DVD players
Intermediate Goods.
goods used in the production of final goods
Saving
income not used for consumption