UTK: Economics 201 - Chapter 7

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UTK: Economics 201 - Chapter 7
2010-09-16 01:37:12
Economics UTK University Tennessee

Chapter 7 - Key Terms
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  1. Definition: Calculating GDP by adding up spending on all final goods and services produced in the nation during the year.
    Expenditure Approach to GDP
  2. Definition: Calculation GDP by adding up all earnings from resources used to produce output in the nation during the year.
    Income Approach to GDP
  3. Definition: Goods and services sold to final, or end, users.
    Final Goods and Services
  4. Definition: Goods and services purchased by firms for additional processing and resale.
    Intermediate Goods and Services
  5. Definition: The mistake of including both the value of intermediate products and the value of final products in calculating the gross domestic product; counting the same production more than once.
    Double Counting
  6. Definition: Household purchases of final goods and services, except for new residences, which count as investment.
  7. Definition: The purchase of new plants, new equipment, new buildings, and new residences, plus net additions to inventories.
  8. Definition: Manufactured items used to produce goods and services; includes new plants and new equipment.
    Physical Capital
  9. Definition: Building new homes or dwelling places.
    Residential Construction
  10. Definition: Producers' stocks of finished and in-process goods.
  11. Definition: Spending for goods and services by all levels of government; government outlays minus transfer payments.
    Government Purchases
  12. Definition: The value of a countries exports minus the value of its imports.
    Net Exports
  13. Definition: Total spending on final goods and services in an economy during a given period, usually a year.
    Aggregate Expenditure
  14. Definition: All earnings of resource suppliers in an economy during a given period, usually a year.
    Aggregate Income
  15. Definition: At each stage of production, the selling price of a product minus the cost of intermediate goods purchased from other firms.
    Value Added
  16. Definition: The income households have available to spend or to save after paying taxes and receiving transfer payments.
    Disposable Income (DI)
  17. Definition: Taxes minus transfer payments.
    Net Taxes (NT)
  18. Definition: Banks and other financial institutions that facilitate the flow of funds from savers to borrowers.
    Financial Markets
  19. Definition: Any spending other than by households or an income other than from resource earnings; includes investment, government purchases, exports, and transfer payments.
  20. Definition: Any diversion of income from the domestic spending stream; includes saving, taxes, and imports.
  21. Definition: Market transactions that go unreported either because they are illegal or because people involved want to evade taxes.
    Underground Economy
  22. Definition: the value of capital stock used up to produce GDP or that becomes obsolete during the year.
  23. Definition: Gross domestic product minus depreciation.
    Net Domestic Product
  24. Definition: GDP based on prices prevailing at the time of production.
    Nominal GDP
  25. Definition: The year with which other years are compared when constructing and index; the index equals 100.
    Base Year
  26. Definition: A number that shows the average price of products; changes over time show changes in and economy's average price level.
    Price Index
  27. Definition: A measure of inflation based on the cost of a fixed market basket of goods and services.
    Consumer Price Index (CPI)
  28. Definition: A comprehensive inflation measure of all goods and services included in the gross domestic product.
    GDP Price Index
  29. Definition: An inflation measure that adjusts the weights from year to year in calculating a price index, thereby reducing the bias caused by a fixed-price weighting system.
    Chain-Weighted System