chapter 5 textbook

Value Added

The amount of value that firms and workers add to their products over and above the costs of purchased intermediate goods.

Intermediate Goods

Outputs of some firms that are used as inputs by other firms.

Final Goods

Products that are not used as inputs by other firms.

Double Counting

The error that arises in estimating a nation’s output by adding all sales of all firms.

Consumption Expenditure

Expenditure on all goods and services sold to their final users.

Investment Expenditure

Expenditure on goods not for present consumption, including inventories.

Government Purchases

All government purchases of goods and services included as part of national expenditure.

Net Exports

The difference between the value of exports and imports.

Factor Incomes

Income earned by factors of production, including wages, interest, and rents.

Gross Domestic Product (GDP)

The total dollar value of all final goods and services produced in a nation during a specific period.

Depreciation

The loss of value of capital goods over time.

Total National Income

The sum of all incomes earned by factors of production in a nation.