Principles of Macroeconomics: Measuring a Nation’s Income

These flashcards cover key vocabulary and concepts from Chapter 10 on measuring a nation's income as outlined in the lecture notes.

Gross Domestic Product (GDP)

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

Nominal GDP

The production of goods and services valued at current prices.

Real GDP

The production of goods and services valued at constant prices, adjusted for inflation.

Components of GDP

Four components including Consumption (C), Investment (I), Government Purchases (G), and Net Exports (NX), which sum to total GDP.

Consumption (C)

Spending by households on goods and services, excluding purchases of new housing.

Investment (I)

Spending on business capital, residential capital, and inventories that will be used to produce goods in the future.

Government Purchases (G)

Spending on goods and services by local, state, and federal governments, excluding transfer payments.

Net Exports (NX)

Exports minus imports; measuring spending on domestically produced goods by foreigners against spending on foreign goods by residents.

GDP deflator

A measure of the overall level of prices in an economy, reflecting current prices relative to prices in a base year.

Economic Well-Being

A concept suggesting that GDP measures economy's total income and expenditure but may not fully reflect societal health, quality of life, or distribution of income.