Economic Chapter 13 Vocabulary

real GDP

GDP that has been adjusted for inflation by applying the price deflator

net exports

difference between what the nation sells to other countries and what is buys from other countries

coincident indicators

economic indicators that usually change at the same time as changes in overall business activity

disposable personal income (DI)

income remaining for people to spend or save after all taxes have been paid

lagging indicators

indicators that seem to lag behind changes in overall business activity

innovations

inventions and new production techniques

business cycle

irregular changes in the level of total output measured by real GDP

depreciation

loss of value because of wear and tear to durable goods and capital goods

trough

lowest part of the business cycle in which the downward spiral of the economy levels off

depression

major slowdown of economic activity

consumer price index (CPI)

measure of the change in price over time of a specific group of goods and services used by the average household

producer price index (PPI)

measure of the change in price over time that United States producers charge for their goods and services

national income accounting

measurement of the national economy's performance, dealing with the overall economy's output and income

market basket

representative group of goods and services used to compile the consumer price index

economic indicators

statistics that measure variables in the economy

leading indicators

statistics that point to what will happen in the economy

aggregates

summation of all the individual parts in the economy

purchasing power

the real goods and services that money can buy; determines the value of money

gross domestic product (GDP)

total dollar value of all final goods and services produced in a nation in a single year

national income (NI)

total income earned by everyone in the economy

personal income (PI)

total income that individuals receive before personal taxes are paid

aggregate demand

total quantity of goods and services in the entire economy that all citizens will demand at any single time

business fluctuations

ups and downs in an economy

net domestic product (NDP)

value of the nation's total output (GDP) minus the total value lost through depreciation on equipment

transfer payments

welfare and other supplementary payments that a state or the federal government makes to individuals

base year

year used as a point of comparison for other years in a series of statistics

aggregate demand curve

a graphed line showing the relationship between the aggregate quantity demanded and the average of all prices as measured by the implicit GDP price deflator

aggregate supply curve

a graphed line showing the relationship between the aggregate quantity supplied and the average of all prices as measured by the implicit GDP price deflator

contraction

part of the business cycle during which economic activity is slowing down

expansion/recovery

part of the business cycle in which economic slowly increases

recession

part of the business cycle in which the nation's output, real GDP, does not grow for at least six months

peak/boom

period of prosperity in a business cycle in which economic activity is at its highest point

GDP price deflator

price index that removes the effect of inflation from GDP so that the overall economy in one year can be compared to another year

deflation

prolonged decline in general price level of goods and services

inflation

prolonged rise in the general price of goods and services

aggregate supply

real domestic output of producers based on the rise and fall of the price level