GDP, Income and Economic Growth

Flashcards by jrath242, updated more than 1 year ago
Created by jrath242 about 8 years ago


Economics Flashcards on GDP, Income and Economic Growth, created by jrath242 on 06/06/2013.

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Question Answer
macroeconomics study of the economy as a whole, including topics such as inflation, unemployment and economic growth.
economic growth the ability of the economy to produce increasing quantities of goods and services.
Business cycle alternating periods of economic expansion and economic contraction relative to trend growth.
expansion period of a business cycle during which total production and total employment are increasing above trend growth.
Recession period of a business cycle during which total production and total employment are decreasing.
inflation rate percentage increase in general price level in the economy from 1 year to the next.
Gross domestic product (GDP) the market value of all final goods and services produced in a country during a period of time.
final good/service new good/service which is the end product of the production process that is purchased by the final buyer.
intermediate good/service good/service that is an input into another good or service.
value-added the market value a firm adds to a product
net exports value of exports minus value/expenditure of imports
transfer payments payments by government to individuals for which government does not receive a good or service in return.
consumption spending by households on goods/services, not including spending on new houses.
investment spending by firms on new factories, office buildings, machinery and inventories, plus spending by households on new houses.
government purchases spending by federal, state and local governments on goods and services.
black economy buying and selling of goods and services that is concealed from the government to avoid taxes and regulations or because the goods and services are illegal.
nominal GDP the market value of final goods/services evaluated at current year prices.
real GDP a measure of the volume of final goods/services, holding prices constant.
economic growth rate the rate of change of real GDP from one year to the next.
price level a measure of the average prices of goods/services in the economy.
GDP deflator a measure of the price level, calculated by dividing nominal GDP by real GDP and multiplying it by 100.
long-run economic growth the process by which rising productivity increased the average standard of living.
labour productivity the quantity of goods/services that can be produced by one worker or by one hour of work.
capital manufactured goods that are used to produce other goods and services. e.g. computers, machines.
human capital the accumulated knowledge and skills workers acquire from education and training or from life experiences.
technological change an increase in the quantity of output firms can produce using a given quantity of inputs. generally new machinery, equipment, software.
Potential GDP the level of GDP attained when all firms are producing at capacity.
economic growth model a model that explains changes in real GDP per capita in the long run.
per-worker production function the relationship between real GDP, or output, per hour worked and capital per hour worked, holding the level of technology constant.
microeconomics study of how households and firms make choices, how they interact in markets and how the government attempts to influence their choices.
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