exam 2 chap 7

A collection of vocabulary flashcards focused on key economic concepts related to Gross Domestic Product and inflation.

Gross Domestic Product (GDP)

The total monetary value of all final goods and services produced within a country's borders during a specific period.

Expenditure Approach

A method to calculate GDP by totaling the expenditures on final-user goods and services.

C+I+G+(X-M)

A formula to calculate GDP where C = Consumption, I = Investment, G = Government Spending, X = Exports, and M = Imports.

Net Exports (X-M)

The difference between exports and imports, used in GDP calculations.

GDP Deflator

A measure of the overall level of prices in the economy, used to calculate real GDP.

Real GDP

GDP adjusted for inflation, reflecting the true value of goods and services.

Nominal GDP

GDP measured at current market prices, without adjusting for inflation.

Inflation

The overall rise in the price level within an economy.

Inflation Rate

The percentage change in the price level from one period to the next.

Used Goods

Items sold second-hand, which are not included in GDP calculations.

Financial Transactions

Transfers involving stocks, bonds, and other financial assets, excluded from GDP.

Transfer Payments

Payments made by the government to individuals, such as social security, excluded from GDP.

Household Labor

Non-market activities like home care and volunteer work, excluded from GDP.

Underground Economy

Illegal activities or unreported work that are not counted in GDP.

Inflation Rate Calculation

(GDP deflator in year 2 - GDP deflator in year 1) / GDP deflator in year 1 x 100.

Consumption (C)

Household spending on goods and services, a component of GDP.

Investment (I)

Business spending on capital goods and residential construction, a component of GDP.

Government Spending (G)

Expenditures by the government on goods and services, included in GDP.

Exports (X)

Goods and services sold to foreign countries, counted in GDP.

Imports (M)

Goods and services purchased from foreign countries, subtracted in GDP calculations.

Intermediate Goods

Goods used in the production of final goods, excluded from GDP to prevent double-counting.