Chapter 12 Gross Domestic Product and Growth (Economics)

Leading Indicators

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

Savings

Income not used for consumption.

Real GDP Per Capita

Real GDP divided by the total population.

Gross National Product

(GDP) the annual income earned by U.S. owned firms and U.S. citizens.

Staflation

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

Contraction

A period of ecomonic 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 especially long and severe.

Economic Growth

A steady, long term increase in real GDP.

National Income Accounting

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

Technological Progress

An increase in efficiency gained by producing more output without using more inputs.

Real GDP

GDP expressed in constant, or unchanging, prices.

Nominal GDP

GDP measured in current prices.

Durable Goods

Goods that last a relatively long time, such as cars and household appliances.

Nondurable Goods

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

Intermediate Goods

Goods used in the production of final goods.

Capital Deepening

Process of increasing the amount of capital per worker.

Aggregate Demand

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

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 national 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 eqipment that results form 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.