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