Chapter 12: Gross Domestic Product and Growth

National Income Accounting.

a system that collects macroeconomic statistics on production, income, investment, and savings

Leading Indicators

key economic variables that economists use to predict a new phase of a business cycle

Capital Deepening

process of increasing the amount of capital per worker

Real GDP Per Capita

real GDP divided by the total population

Aggregate Demand

the amount of goods and services in the economy that will be purchased at all possible price levels

Gross National Product (GNP)

the annual income earned by U.S.-owned firms and U.S. citizens

Price Level

the average of all prices in the economy

Gross Domestic Product.

the dollar value of all final goods and services produced within a country's borders in a given year

Peak

the height of an economic expansion, when real GDP stops rising

Depreciation

the loss of the value of capital equipment that results from normal wear and tear

Trough

the lowest point in an economic contraction, when real GDP stops falling

Savings Rate

the proportion of disposable income that is saved

Aggregate Supply

the total amount of goods and services in the economy available at all possible price levels

Real GDP

GDP expressed in constant, or unchanging, prices

Nominal GDP

GDP measured in current prices

Stagflation

a decline in real GDP combined with a rise in the price level

Contraction

a period of economic decline marked by falling real GDP

Expansion

a period of economic growth as measured by a rise in real GDP

Business Cycle

a period of macroeconomic expansion followed by a period of contraction

Recession

a prolonged economic contraction

Depression

a recession that is especially long and severe

Economic Growth

a steady, long-term increase in real GDP

Technological Progress

an increase in efficiency gained by producing more output without using more inputs

Non-durable Goods

goods that last a short period of time, such as food, light bulbs, and sneakers

Durable Goods.

goods that last for a relatively long time, such as refrigerators, cars, and DVD players

Intermediate Goods.

goods used in the production of final goods

Saving

income not used for consumption