Chapter 11 Vocabulary
Transfer payment
A government payment to persons not in exchange for goods or services produced
Circular flow model
A model that shows the exchange of money, products, and resources between businesses, households, and government
Economic growth
An increase in a nation's real GDP
Expansion
An upturn in the business cycle during which real GDP rises
Real GDP
GDP adjusted for changes in prices over time
GDP per capita
GDP divided by the total population
Nominal GDP
GDP measured in current prices
Final goods
Goods and services sold to the final user
Intermediate goods
Goods and services used as inputs for the production of final goods
Lagging indicators
Key variables that change after real GDP changes
Coincident indicators
Key variables that change at the same time that real GDP changes
Leading indicators
Key variables that change before real GDP changes
Business cycle
The alternating periods of economic growth and contraction measured by changes in real gross domestic product
Recession
The downturn in the business cycle during which Real GDP declines. Also called a contraction
Gross domestic product
The market value of all final goods and services produced annually in a country
Trough
The phase of the business cycle in which real GDP reaches its lowest point after falling during a recession
Peak
The phase of the business cycle in which real GDP reaches its maximum after rising during a recovery
