Macroeconomics, Ch. 6

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Description and Tags

26 Terms

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business cycle
the economy's relatively short-term movement in and out of recession
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depreciation
the process by which capital ages over time and therefore loses its value
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depression
an especially lengthy and deep decline in output
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double counting
a potential mistake to avoid in measuring GDP, in which output is counted more than once as it travels through the stages of production
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durable good
long-lasting good like a car or a refrigerator
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exchange rate
the price of one currency in terms of another currency
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final good and service
output used directly for consumption, investment, government, and trade purposes; contrast with "intermediate good"
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GDP per capita
GDP divided by population
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gross domestic product (GDP)
the value of the output of all goods and services produced within a country in a year
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gross national product (GNP)
includes what is produced domestically and what is produced by domestic labor and business abroad in a year
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intermediate good
output provided to other businesses at an intermediate stage of production, not for final users; contrast with "final good and service"
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inventory
good that has been produced, but not yet been sold
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national income
includes all income earned: wages, profits, rent, and profit income
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net national product (NNP)
GDP minus depreciation
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nominal value
the economic statistic actually announced at that time, not adjusted for inflation; contrast with real value
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nondurable good
short-lived good like food and clothing
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peak
during the business cycle, the highest point of output before a recession begins
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real value
an economic statistic after it has been adjusted for inflation; contrast with nominal value
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recession
a significant decline in national output
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service
product which is intangible (in contrast to goods) such as entertainment, healthcare, or education
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standard of living
all elements that affect people's happiness, whether these elements are bought and sold in the market or not
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structure
building used as residence, factory, office building, retail store, or for other purposes
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trade balance
gap between exports and imports
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trade deficit
exists when a nation's imports exceed its exports and is calculated as imports -exports
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trade surplus
exists when a nation's exports exceed its imports and is calculated as exports - imports
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trough
during the business cycle, the lowest point of output in a recession, before a recovery begins