CH.10 Vocab

U.S. GNP

excludes production of foreigners working in the U.S. but includes production by U.S. citizens working in foreign countries.

Net exports equal

exports minus imports.

Government purchases include spending on goods and services by

federal, state, and local governments.

A transfer payment is a payment made by

government, but not in exchange for a currently produced good and service.

GDP is defined as the

value of all final goods and services produced within a country in a given period of time.

For the purpose of calculating GDP, investment is spending on

capital equipment, inventories, and structures, including household purchases of new housing.

Real GDP is the yearly production of final goods and services valued at

constant prices.

The consumption component of GDP includes spending on

durable goods, nondurable goods, and services.

The GDP deflator is the ratio of

nominal GDP to real GDP multiplied by 100.

Disposable income is

the income that households and businesses have remaining after satisfying their obligations to the government.