Economics Ch 7

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  1. Gross Domestic Product (GDP)
    market value of all final goods/services made in country
  2. Intermediate goods
    purchased for resale or use in making other good/service
  3. final market goods/services
    purchased by their ultimate user
  4. personal consumption
    • household spending on goods/services
    • consumption is a flow concept
  5. private investment
    • flow of private sector expenditures on durable assets plus inventories
    • enhance ability to provide consumer benefits in the future
  6. depreciation
    amount of physical capital worn out or used up
  7. inventory investment
    changes in the stock of unsold goods and raw materials
  8. net exports
    exports minus imports
  9. exports
    goods/services made domestically but sold to foreigners
  10. imports
    goods/services made by foreigners but bought domestically
  11. indirect business taxes
    • taxes that increase a business firm's cost of production
    • ex: sales, excise, property taxes
  12. national income
    • total income earned by citizens
    • sum of employee compensation
    • self-employment income, rents, interests, corporate profit
  13. Gross National Product (GNP)
    • total market value of final goods/services made by citizens
    • equal to GDP minus the net income of foreigners
  14. net income of foreigners
    income made by foreigners within the borders of a country minus the income the national earn abroad
  15. nomial values
    expressed in current dollars
  16. real values
    adjusted for the effects of inflation
  17. consumer price index
    • indicator of general level of prices
    • compare cost of purchasing goods
  18. GDP deflator
    • price index that shows the current cost vs base year
    • measures the prices of capital goods/services bought by business and gov't
  19. inflation
    • increase in the general level of prices of goods/services
    • buying power of monetary unit when inflation is present
  20. nominal GDP
    expressed at current prices
  21. Real GDP
    adjusted for changes in the price level
  22. underground economy
    • unreported barter and cash transaction and not recorded
    • legal activities that evade taxes
    • illegal activities like drug trafficking and prostitution
Card Set
Economics Ch 7
Economics class @ NU
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