Gross Domestic Product and Growth Flashcards

Flashcards for reviewing key vocabulary from Chapter 12 and 13 on Gross Domestic Product, Business Cycles, Economic Growth, Unemployment, Inflation and Poverty

Gross Domestic Product (GDP)

The dollar value of all final goods and services produced in a country in a given year.

Income Approach (GDP)

One method of calculating Gross Domestic Product.

Expenditure Approach (GDP)

One method of calculating Gross Domestic Product.

Nominal GDP

GDP measured in current prices.

Real GDP

GDP measured in constant prices.

Non-market Goods and Services

Goods and services not included in GDP calculations.

Underground Business

Business activity for which there is no record, and is not included in GDP.

Aggregate Supply

One of the main factors that affect GDP.

Aggregate Demand

One of the main factors that affect GDP.

Gross Domestic Product

Used to determine gross domestic product, national product, national income, personal income, and disposable personal income.

Business Cycle

A cycle of macroeconomic expansion followed by a period of contraction.

Expansion

A stage of the business cycle.

Peak

A stage of the business cycle.

Contraction

A stage of the business cycle.

Trough

A stage of the business cycle.

Recession

A kind of contraction.

Depression

A kind of contraction.

Stagflation

A decline in real GDP combined with a rise in inflation

Business Investments

A main factor that keeps the business cycle going.

Interest Rates and Credit

A main factor that keeps the business cycle going.

Consumer Expectations

A main factor that keeps the business cycle going.

External Shocks

A main factor that keeps the business cycle going.

Leading Indicators

Variables that help economists predict business cycles.

Economic Growth

A steady, long-term increase in real GDP

Real GDP per capita

Real GDP divided by total population.

Capital Deepening

Increasing the amount of capital per worker.

Saving

Affects capital deepening and economic growth.

National Income Accounting

A system that collects macroeconomic statistics on production, income, investment, and savings.

Durable Goods

Consumer goods that last for a long time.

Price Level

The average of all prices in the economy.

Intermediate Goods

Products used in the production of final goods.

Depreciation

Loss of value of capital equipment that results from normal wear and tear.

Nondurable Goods

Goods that do not last for a long time

Real GDP per capita

Real GDP divided by the total population

Technological Progress

An increase in efficiency gained from producing more output without using more inputs.

Savings Rate

The proportion of disposable income saved.

Globalization

The shift from local to global markets.

Cyclical Unemployment

Unemployment that rises during economic downturns and falls when the economy improves.

Frictional Unemployment

Unemployment that occurs when people take time to find a job.

Structural Unemployment

Unemployment that occurs when the skills of workers do not match the jobs that are available.

Unemployment Rate

The percentage of the labor force that is unemployed.

Price Index

A measurement that shows how the average cost of goods or services changes over time.

Wage-Price Spiral

Rising wages causing higher prices which cause higher wages.

Fixed Income

Income that does not increase even when prices go up.

Purchasing Power

A sustained drop in the prices of goods.

Quantity Theory

he idea that too much money in the economy causes inflation

Poverty Threshold

The amount of money a family needs to pay for minimum needs.

Poverty Rate

The percentage of people who are living in poverty.

Workfare

The program requiring work in exchange for temporary government assistance.

Lorenz Curve

Shows income distribution in an economy.

Food Stamp Program

A program that provides money for low-income people to buy food.

Gross Domestic Product (GDP)

The dollar value of all final goods and services produced within a country in a given year.

Peak

The highest point in an economic expansion

Economic Growth

A steady, long-term increase in real GDP

Business Cycle

A period of macroeconomic expansion followed by a period of contraction

Trough

The lowest point in an economic contraction

Stagflation

A decline in real GDP combined with a rise in inflation

Real GDP per capita

Real GDP divided by the total population

Capital Deepening

Increasing the amount of capital per worker.

Intermediate goods

Products used in the production of final goods

National income accounting

A system that collects macroeconomic statistics on production, income, investment, and savings

Price level

The average of all prices in the economy

Durable goods

Consumer goods that last for a long time

Nondurable goods

Goods that do not last for a long time

Depreciation

Loss of value of capital equipment that results from normal wear and tear

Full employment

There is no cyclical unemployment.

inflation

A general increase in prices

Deflation

A sustained drop in the prices of goods

Hyperinflation

Out of control inflation

Recession

A prolonged economic contraction.

Seasonal Unemployment

situation that occurs when a period of steady work is followed by a period of unemployment each year

Discouraged worker

A person who has given up looking for work

Underemployed

Working at a job for which one is overqualified, or working part-time when full-time work is desired.

TANF program

limit the amount of time a family could receive assistance.