AP Macro - Unit 2 Vocab

gross domestic product (GDP)

total value of all goods and services produced in a year within that country

national income (NI)

sum of income earned by the factors of production owned by a country’s citizens

personal income (PI)

the money income received by households before personal income taxes are subtracted

disposable income (DI)

personal income minus personal income taxes

expenditure approach

a method used for calculating gdp: GDP = C + I + G + (X-M)

C = personal consumption

I = investment in new physical capital

G = government purchases

X = exports

M = imports

income approach

method used to calculate gdp; all economic expenditures should equal the total income generated by the production of all economic goods and services.

calculated by taking sum of total national income, sales tax, depreciation, and net foreign factor income.

deprciation

the decline in the value of capital over time due to wear of obsolescence

subsidy payments

a benefit given to an individual, business, or institution, usually by the government

direct (cash payments) or indirect (tax breaks)

net foreign income

what a citizen is earning in income no matter where they are physically located

net domestic product

gdp minus depreciation, indicates how much output is left over for consumption and additions to the capital stock after replacing the capital used up in the production process

aggregate income

total of all incomes in an economy without adjustments for inflation, taxation, or types of double counting

labor force

includes employed and unemployed adults

unemployed

labor force participant that is willing and able to work and has made an effort to seek work in the past four weeks

labor force participation rate

number of people in the labor force divided by the working-age population

unemployment rate

(number of unemployed/number in labor force) * 100