Chapter 12

Government spending counted as part of GDP includes spending on

public education

Investment measures what businesses

sell

During the 1970s, both unemployment and prices rose, creating

stagflation

An example of a coincident indicator

stock prices

Inventory investment is made up of

unsold goods that businesses have on hand

A series of periods of expanding and contracting economic activity is called a

business cycle

The underground economy includes market activities that

go unreported because they are illegal

The market value of all final goods and services produced within a nation in a given time period is called

gross domestic product

Efficiently run financial markets

help to increase productivity

Productivity increases when

more input produces more output

The total income earned in a nation from the production of goods and services in a given time period is called

national income

GDP that is stated in the price levels for the year in which the GDP was measured is called

nominal GDP

The highest point of a business cycle is called the

peak

An example of a nonmarket activity is

performing one's own home repairs

The income received by a country's people from all sources in a given time period is called

personal income

Before Adam Smith, many people believed that economic growth was caused by

population growth and higher taxation

An example of a final good is

a book

As supply increases, prices go down, and real GDP

decreases

An extended period of high unemployment and limited business activity is called a

depression

Jobs are relatively easy to find during an

expansion

The Great Depression

the New Deal was enacted

An example of a durable good is a

truck