Chapter 12 Economic Indicators and Measures

consumption

spending by households on durable goods, nondurable goods and services

gross domestic product (GDP)

the market value of all final goods and services produced within a nation during a given time period

net exports

foreign trade

net national product (NNP)

total value of goods after depreciation of capital goods

government spending

government spending on everything except transfer payments

disposable personal income (DPI)

personal income minus taxes

nominal GDP

states the GDP in terms of the current value of goods and services

real GDP

nominal GDP adjusted for changes in prices

nonmarket activities

services that have potential economic value but are performed without charge

underground economy

describes market activities that go unreported because they are illegal or because those involved want to avoid taxation

gross national product (GNP)

market value of all final goods and services produced by a country

national income (NI)

is the total income earned in a nation from the production of goods and services

personal income (PI)

income received by a country's people from all sources

business cycle

the series of growing and shrinking periods of economic activity measured by increases or decreases in real GDP

economic growth

the increase in a nation's real GDP over a period of time

peak

point at which real GDP is highest

recession

a prolonged economic contraction lasting two or more quarters (six months or more)

depression

an extended period of high unemployment and reduced business activity

stagflation

periods during which prices rise at the same time that there is a slowdown in business activity

contraction

period of output declines

trough

low point in time

what is the business cycle measured by?

increase and decrease of real gdp

when does the contraction phase start?

after the peak

stagflation can also be?

inflation

aggregate demand

the sum of all the demand in the economy

aggregate supply

the sum of all the supply in the economy

macroeconomic equilibrium

the quantity of aggregate supply it equal to the quantity of aggregate demand

leading indicators

economic changes made before the real gdp changes

coincident indicators

economic changes made right as the gdp changes

lagging indicators

changes made after the gdp changes

real GDP per capita

real gdp divided by population

labor input

size of the labor force multiplied by the length of the workweek

capital deepening

the increase in the ratio of capital to labor

multi-factor productivity

the ratio between the amount of output produced by the industry and the amount of inputs used