Economics concepts and choices Chapter 12
nominal GDP
GDP in terms of the current value of goods and services
recession
a prolonged economic contraction lasting two or more quarters (6 months or more)
national income accounting
a way of evaluating a country's economy using statistical measures of its income, spending, and output
capital deepening
an increase in the ratio of capital to labor
underground economy
describes market activities that go unreported because they are illegal or because those involved want to avoid taxation
stagflation
describes periods during which prices rise at the same time that there is a slowdown in business activity
depression
extended period of high unemployment and reduced business activity
consumption
includes all spending by households on durable goods, nondurable goods, and services
government spending
includes all the expenditures of federal, state, and local governments on goods and services
lagging indicators
measures of economic performance that usually change after real GDP changes
coincident indicators
measures of economic performance that usually change at the same time as real GDP changes
leading indicators
measures of economic performance that usually change before reals GDP changes
investment
measures what business spend (two categories: fixed and inventory)
Disposable personal income (DPI)
personal income minus taxes
real GDP per capita
real GDP divided by total population
net exports
represents foreign trade
nonmarket activities
services that have potential economic value but are performed without charge.
real GDP
states GDP corrected for changes in prices from year to year
personal income (PI)
the income received by a country's people from all sources
economic growth
the increase in a nation's real GDP over a period of time
Gross nation product (GNP)
the market value of all final goods and services produced by a country
Gross Domestic product (GDP)
the market value of all final goods and services produced within a nation in a given time period
macroeconomic equilibrium
the point where the quantity of aggregate demand equals the quality of aggregate supply
multifactor productivity
the ratio between the amount of output produced by an industry or business sector and the amount of inputs used
productivity
the ratio of the amount of output produced to the amount of input
business cycle
the series of growing and shrinking periods of economic activity, measured by increases or decreases in real GDP
labor input
the size of the labor force multiplied by the length of the workweek
aggregate demand
the sum of all the demand in the economy
aggregate supply
the sum of all the supply in the economy
nation income (NI)
the total income earned in a nation from the production of goods and services