Economics concepts and choices Chapter 12

nominal GDP

GDP in terms of the current value of goods and services

recession

a prolonged economic contraction lasting two or more quarters (6 months or more)

national income accounting

a way of evaluating a country's economy using statistical measures of its income, spending, and output

capital deepening

an increase in the ratio of capital to labor

underground economy

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

stagflation

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

depression

extended period of high unemployment and reduced business activity

consumption

includes all spending by households on durable goods, nondurable goods, and services

government spending

includes all the expenditures of federal, state, and local governments on goods and services

lagging indicators

measures of economic performance that usually change after real GDP changes

coincident indicators

measures of economic performance that usually change at the same time as real GDP changes

leading indicators

measures of economic performance that usually change before reals GDP changes

investment

measures what business spend (two categories: fixed and inventory)

Disposable personal income (DPI)

personal income minus taxes

real GDP per capita

real GDP divided by total population

net exports

represents foreign trade

nonmarket activities

services that have potential economic value but are performed without charge.

real GDP

states GDP corrected for changes in prices from year to year

personal income (PI)

the income received by a country's people from all sources

economic growth

the increase in a nation's real GDP over a period of time

Gross nation product (GNP)

the market value of all final goods and services produced by a country

Gross Domestic product (GDP)

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

macroeconomic equilibrium

the point where the quantity of aggregate demand equals the quality of aggregate supply

multifactor productivity

the ratio between the amount of output produced by an industry or business sector and the amount of inputs used

productivity

the ratio of the amount of output produced to the amount of input

business cycle

the series of growing and shrinking periods of economic activity, measured by increases or decreases in real GDP

labor input

the size of the labor force multiplied by the length of the workweek

aggregate demand

the sum of all the demand in the economy

aggregate supply

the sum of all the supply in the economy

nation income (NI)

the total income earned in a nation from the production of goods and services