Unit 5 Chapter 12 Gross Domestic product and growth

Real GDP

a macroeconomic measure of the value of economic output adjusted for price changes. This adjustment transforms the money-value measure, nominal GDP, into an index for quantity of total output.

GDP per capita

a measure of average income per person in a country. GDP stands for Gross domestic product.

Stagflation

a situation in which the inflation rate is high, the economic growth rate slows, and unemployment remains steadily high.

Depression

a sustained, long-term downturn in economic activity in one or more economies.

Trough

is a low turning point or a local minimum of a business cycle. The time evolution of many variables of economics exhibit a wave like behavior with local maxima (peaks) followed by local minima (troughs).

Contraction

occurs after the business cycle peaks but before it becomes a trough. According to most economists, a contraction is said to occur when a country's real GDP has declined for two or more consecutive quarters.

Capital Deepening

often measured by the rate of change in capital stock per labour hour. Overall, the economy will expand, and productivity per worker will increase.

Intermediate goods

used as inputs in the production of other goods including final goods. A firm may make and then use intermediate goods

Gross Domestic Product

Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country's borders in a specific time period.

Recession

Period of general economic decline, defined usually as a contraction in the GDP for six months

national Income Accounting

a bookkeeping system that a national government uses to measure the level of the country's economic activity in a given time period

Business cycle

series of cycles of economic expansion and contraction.

Depreciation

the gradual decrease in the economic value of the capital stock of a firm, nation

Peak

the highest point between the end of an economic expansion and the start of a contraction in a business cycle

Expansion

the phase of the business cycle when the economy moves from a trough to a peak. It is a period when the level of business activity surges and gross domestic product (GDP) expands until it reaches a peak

Aggregate Demand

the total demand for final goods and services in an economy at a given time. It specifies the amounts of goods and services that will be purchased at all possible price levels.

Aggregate Supply

the total supply of goods and services that firms in a national economy plan on selling during a specific time period

Nominal GDP

this is gross domestic product (GDP) evaluated at current market prices, GDP being the monetary value of all the finished goods and services produced within a country's borders in a specific time period