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National Income and Product Accounts (NIPA):
A system used to track a country’s total economic activity, including income, spending, and production.
National Accounts
A comprehensive set of data that measures a nation’s overall economic performance, including production, income, and expenditures.They provide essential information for economic policy and analysis.
Household
A group of individuals who share income and expenses, typically living together and making economic decisions collectively.Households can include families, roommates, or any group sharing living arrangements.
Firm
A business entity that produces goods and services, often selling them for profit in the market.
Product Markets
Markets where final goods and services are bought and sold by consumers, businesses, and the government.
Factor Markets
Markets where productive resources (land, labor, and capital) are bought and sold, such as labor markets for workers.
Consumer Spending
The total money spent by households on goods and services, a major component of economic activity.
Stock
A financial asset representing ownership in a company, giving shareholders a claim on its profits.Stock can also provide voting rights in corporate decisions and may pay dividends to shareholders.
Bond
A fixed-income investment where an investor lends money to a firm or government in exchange for periodic interest payments and repayment at maturity.Bonds are used by corporations and governments to raise funds, and they typically have a specified interest rate and maturity date.
Government Transfers
Payments made by the government to individuals without requiring goods or services in return, such as Social Security or unemployment benefits.
Disposable Income
The amount of money households have left after paying taxes, available for spending or saving.
Private Savings
The portion of disposable income that households save rather than spend on goods and services.
Financial Markets
Markets where financial assets like stocks, bonds, and loans are bought and sold, facilitating investment.
Government Borrowing
The money the government takes in loans to finance spending beyond its tax revenue, typically through issuing bonds.
Government Purchases of Goods and Services
Spending by the government on goods and services, including infrastructure, defense, and public services.
Exports
Goods and services produced domestically and sold to other countries.
Imports
Goods and services produced abroad and purchased by domestic consumers.
Inventories
Stocks of goods held by businesses to be sold or used in production at a later time.They serve as a buffer against fluctuations in demand and supply.
Investment Spending
Money spent on physical capital, such as machinery, buildings, and equipment, to increase future production.
Final Goods and Services
Products sold for consumption, not used in the production of other goods (e.g., a car sold to a consumer).
Intermediate Goods and Services
Goods used in the production of final goods (e.g., steel used to manufacture cars).
Gross Domestic Product (GDP)
The total value of all final goods and services produced in a country within a given time period.
Aggregate Spending
The total spending on goods and services in an economy, including consumption, investment, government purchases, and net exports.
Value Added
The contribution of a firm to the economy, calculated as total sales minus the cost of intermediate goods.
Net Exports
The value of a country’s exports minus its imports, showing the balance of trade.
Aggregate Output
The total quantity of goods and services produced in an economy over a specific period.
Real GDP
GDP adjusted for inflation, reflecting the actual quantity of goods and services produced.
Nominal GDP
GDP measured using current prices, not adjusted for inflation.
Chain-linking
A method for calculating real GDP that averages growth rates using different base years to reduce distortions.
GDP Per Capita
Real GDP divided by the population, measuring the average economic output per person.
Employed
Individuals who have jobs and are working for pay.
Unemployed
Individuals actively seeking work but currently without a job.
Labor Force
The total number of employed and unemployed individuals in an economy.
Labor Force Participation Rate
The percentage of the working-age population that is either employed or actively seeking work.
Unemployment Rate
The percentage of the labor force that is unemployed and actively seeking a job.
Discouraged Worker
A person who has stopped looking for work because they believe no jobs are available.
Marginally Attached Workers
Individuals who would like to work and have looked for a job in the past but are not currently searching.
Underemployed
Workers who are employed but in jobs that do not fully use their skills or who are working fewer hours than desired.
Job Search
The process of looking for employment, typically involving applying for jobs and attending interviews.
Frictional Unemployment
Short-term unemployment that occurs as people transition between jobs or enter the labor force.
Structural Unemployment
Unemployment caused by a mismatch between workers’ skills and job requirements, often due to technological changes.
Efficiency Wages
Higher-than-market wages paid by employers to increase worker productivity and reduce turnover.
Natural Rate of Unemployment
The normal level of unemployment in an economy, including both frictional and structural unemployment.
Cyclical Unemployment
Unemployment caused by economic downturns, such as recessions, when demand for labor decreases.
Real Wage
The purchasing power of wages, adjusted for inflation.
Real Income
Income adjusted for inflation, reflecting its true value in terms of purchasing power.
Inflation Rate
The percentage increase in the overall price level of goods and services over time.
Shoe-leather Costs
The increased costs of transactions due to inflation, such as people making more trips to the bank to avoid holding cash.
Menu Costs
The costs businesses face when frequently changing prices due to inflation, such as printing new price lists.
Unit-of-Account Costs
The distortions in economic decision-making caused by inflation making money a less reliable measure of value.
Nominal Interest Rate
The stated interest rate on a loan or investment, not adjusted for inflation.
Real Interest Rate
The nominal interest rate minus the inflation rate, showing the true cost of borrowing.
Disinflation
A slowdown in the rate of inflation, meaning prices are still rising but at a slower pace.
Aggregate Price Level
The overall level of prices for goods and services in an economy at a given time.
Market Basket
A collection of goods and services used to measure changes in the cost of living and inflation.
Price Index
A measure that tracks changes in the price of a set of goods and services over time.
Consumer Price Index (CPI)
A widely used measure of inflation that tracks the average price of goods and services purchased by consumers.
Producer Price Index (PPI)
A measure of inflation that tracks changes in prices received by producers for their goods and services
GDP Deflator
A measure of inflation that adjusts nominal GDP to reflect changes in the price level over time.
