chapter 12 econ

recession

a prolonged economic contraction lasting two or more quarters , six months or more.

nonmarket activities

services that have potential economic value but are performed without charge

productivity

the amount of output produced from a set of inputs

Explain how a country with few natural resources can still have economic growth.

A nation could have high labor input more capital goods from capital deepening and possess advanced technology and innovation. Japan and south korea

In what way is GDP a baseline for other economic indicators?

GDP represents the market value of all goods and services within a given time period and is a baseline to go off of for other indicators

What are four key factors that influence economic growth?

Natural resources, human resources, capital, and technology and innovation

Name two economic activities that GDP does not measure.

Nonmarket activities and the underground economy

What are the four components of GDP?

The four components are personal consumption includes all spending by households on durable, nondurable goods, and services, investment measures what businesses spend on fixed investment of new construction and capital goods and the unsold goods kept on hand, net exports takes in account the goods and services produced in the US but sold world wide minus the foreign made goods purchased by US homes (usually a negative number because we consumer more than we produce), and government expenditures includes all expenditures of the federal, state, and local governments.

What do leading economic indicators say about the economy?

They predict changes in the economy

depression

an extended period of high unemployment and reduced business activity

capital deepening

an increase in ratio of capital to labor

economic growth

an increase in the real gross domestic product

underground economy

market activites that go unreported because they are illegal or because those involved want to avoid taxation

lagging indicators

measures of economic performance that usually change after real gross domestic product changes

coincident indicators

measures of economic performance that usually change at the same time as real gross domestic product changes

leading indicators

measures of economic performance that usually change before real gross domestic product changes

stagflation

period during which prices rise at the same time that there is a slowdown in business activity

real GDP

the gross domestic product corrected for changes in prices from year to year

nominal GDP

the gross domestic product stated in terms of the current value of goods and services

gross domestic product

the market value for all final goods and services produced within a nation in a given time period.

gross national product

the market value of all the final goods and services produced by a country in a given time period

macroeconomic equilibrium

the point where aggregate demand equals aggregate supply

Real GDP per capita

the real gross domestic product divided by the population

business cycle

the series pf growing and shrinking periods of economic activity, measured by increases or decreases in real gross domestic product

aggregate demand

the sum of all demand in the economy

aggregate supply

the sum of all supply in the economy