Chap 7 Econ vocab
nominal GDP
GDP measured in terms of the price level at the time of measurement; GDP not adjusted for inflation. Compare with real gross domestic product (real GDP).
expenditures approach
The method that adds all expenditures made for final goods and final services to measure the gross domestic product.
income approach
The method that adds all the income generated by the production of final goods and final services to measure the gross domestic product.
gross domestic product
The total market value of all final goods and final services produced annually within the boundaries of a nation.
value added
The value of a product sold by a firm less the value of the products (materials) purchased and used by the firm to produce that product.
base year
The year with which other years are compared when an index is constructed; for example, the base year for a price index.
multiple counting
mistake of including sales value of intermediate goods in GDP
price index
An index number that shows how the weighted-average price of a "market basket" of goods changes over time relative to its price in a specific base year.
disposable income
Personal income less personal taxes; income available for personal consumption expenditures and personal saving.
Intermediate goods and services
Products that are purchased for resale or further processing or manufacturing.
final goods and services
Products that have been purchased for final use (rather than for resale or further processing or manufacturing.)
nondurable goods
A consumer good with an expected life (use) of less than three years
durable goods
A consumer good with an expected life (use) of three or more years.
taxes on production and imports
A national income accounting category that includes such taxes as sales, excise, business property taxes, and tariffs that firms treat as costs of producing a product and pass on (in whole or in part) to buyers by charging a higher price.
service
An (intangible) act or use for which a consumer, firm, or government is willing to pay.
consumption of fixed capital
An estimate of the amount of capital worn out or used up (consumed) in producing the gross domestic product; also called depreciation.
net domestic product
An estimate of the amount of capital worn out or used up (consumed) in producing the gross domestic product; also called depreciation.
government purchases
Expenditures by government for goods and services that government consumes in providing public services as well as expenditures for publicly owned capital that has a long lifetime; the expenditures of all governments in the economy for those final goods and final services.
gross private domestic investment
Expenditures that increase the nation's stock of capital, which is the collection of physical objects and intangible ideas that help to produce goods and services. Includes spending on final purchases of plant, machinery, and equipment by business enterprises; residential construction; changes in inventories; expenditures on the research and development (R&D) of new productive technologies; and money spent on the creation of new works of art, music, writing, film, and software.
real gdp
Gross domestic product adjusted for inflation; gross domestic product in a year divided by the GDP price index for that year, the index expressed as a decimal. Compare with nominal GDP.
net private domestic investment
Gross private domestic investment less consumption of fixed capital; the addition to the nation's stock of capital during a year.
gross output
The dollar value of the economic activity taking place at every stage of production and distribution. By contrast, gross domestic product (GDP) only accounts for the value of final output.
personal income
The earned and unearned income available to resource suppliers and others before the payment of personal taxes.
personal consumption expenditures
The expenditures of households for both durable and nondurable consumer goods.
national income accounting
The techniques used to measure the overall production of a country's economy as well as other related variables.