ECON Chapter 2 notes.txt

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ECON Chapter 2 notes.txt
2012-09-26 11:05:25
ECON Chapter

ISU ECON 1100 Chapter 2
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  1. What is the GDP?
    The total value of final goods and services produced within a nation�s borders in a given time period.
  2. What is the nominal GDP?
    The value of output measured in current prices.
  3. Define real GDP
    The inflation-adjusted value of the GDP: the value of output measured in constant prices.
  4. What is Per Capita GDP?
    Total GDP divided by total population average GDP.
  5. Define Economic Growth
    An increase in real GDP output, an expansion of production possibilities.
  6. Whats an investment?
    Expenditures on or the production of new plant and equipment (capital) in a fiven time period, plus changes in business inventories.
  7. What are the major uses of total output?
    • 1. Household consumption
    • 2. Business Investment
    • 3. Government Services
    • 4. Exports
  8. What is income transfers?
    Payments to individuals for which no current goods or services are exchanged, e.g. social security, welfare, unemployment
  9. Define export
    Goods and services sold to foreign buyers
  10. Define imports
    Goods and services purchased from foreign sources
  11. Fill in the blank� American has largely become a _____.
    Service economy
  12. What is factors of production?
    Resources inputs used to produce goods and services e.g. land, labor, capital, entrepreneurship.
  13. What is capital intensive?
    Production processes that use a high ratio of capital to labor inputs.
  14. What is productivity?
    Output per unit of input. E.g. output per labor hour.
  15. What is the human capital?
    The knowledge and skills possessed by the workforce.
  16. Note to remember
    The high productivity of the U.S. economy results from using highly educated workers in capital-intensive production processes.
  17. What is monopoly? And we�re not talking about a game
    A firm that produces the entire market supply og a particular good or service.
  18. What is externalities?
    Costs (or benefits) of a market activity borne by a third party.
  19. What is personal distribution of income?
    The way total personal income is divided up among households or income classes.
  20. What is progressive tax?
    A tax system in which tax rates rise as income rise.
  21. What is regressive tax?
    A tax system in which tax rates fall as incomes rise.