Chapter 10 Macroeconomics

macroeconomics

Gross Domestic Product (GDP)

The market value of all final goods and services produced within a country in a given period of time.

Nominal GDP

Values output using current prices and is not corrected for inflation.

Real GDP

Values output using the prices of a base year and is corrected for inflation.

Components of GDP

The four components of GDP are Consumption (C), Investment (I), Government Purchases (G), and Net Exports (NX).

Consumption (C)

Total spending by households on goods and services.

Investment (I)

Total spending on goods that will be used in the future to produce more goods.

Government Purchases (G)

All spending on goods and services purchased by the government at federal, state, and local levels.

Net Exports (NX)

The value of a country's exports minus its imports.

GDP Deflator

A measure of the overall level of prices calculated as 100 times the ratio of nominal GDP to real GDP.

Circular-Flow Diagram

A simple depiction of the macroeconomy that illustrates GDP as spending, revenue, factor payments, and income.

Inflation

A rise in the general level of prices of goods and services in an economy over a period.

Intermediate Goods

Goods used as components in the production of other goods, not included in GDP.

Factors of Production

Inputs like labor, land, capital, and natural resources used to produce goods.

Factor Payments

Payments made to the factors of production, such as wages and rents.

Economic Growth

An increase in the production of goods and services in an economy over a period.

Economic Well-Being

A measure of quality of life and standard of living, often assessed using real GDP per capita.

Transfer Payments

Payments made by the government to individuals without any goods or services being received in return.

Expenditure

The action of spending funds; in GDP context, it refers to the total spending on the economy's output.