Chapter 23 & 24 Ap macro

microeconomics

the study of how households and firms make decisions and how they interact in markets

macroeconomics

The study of economy-wide phenomena, including inflation, unemployment, and economic growth

Gross domestic product

the market value of all final goods and services produced wihtin a country in a given period of time

consumption

spending by households on goods and services with the exception of purchases of new housing

investment

spending on capital equipment, inventories, and structures, including household purchases of new housing

government purchases

spending on goods and services by local, state, and federal governments

net exports

spending on domestically produced goods by foreigners minus spending on foreign goods by domestic residents

nominal GDP

the production of goods and services valued at current prices

real GDP

the production of goods and services valued at constant prices

GDP deflator

a measure of the price level calculated as the ratio of nominal GDP to real GDP times 100

consumer price index (CPI)

a measure of the overall cost of the foods and services bought by a typical consumer

inflation rate

the percentage change in the price index from the preceding period

producer price index

a measure of the cost of a basket of goods and services bought by firms

indexation

The automatic correction by law or contract of a dollar amount for the effects of inflation

nominal interest rate

the interest rate as usually reported without a correction for the effects of infl