Chapter 18: GDP: Measuring Total Production and Income

These flashcards cover key vocabulary and concepts discussed in Chapter 18 on GDP, measuring total production and income.

Gross Domestic Product (GDP)

The market value of all final goods and services produced in a country during a period of time, typically one year.

Nominal GDP

The value of final goods and services evaluated at current-year prices.

Real GDP

The value of final goods and services evaluated at base-year prices.

Economic Growth

The ability of an economy to produce increasing quantities of goods and services.

Inflation Rate

The percentage increase in the price level from one year to the next.

Business Cycle

Alternating periods of economic expansion and economic recession.

Expansion

The period of a business cycle during which total production and total employment are increasing.

Recession

The period of a business cycle during which total production and total employment are decreasing.

Household Production

Contributions such as childcare, cleaning, and cooking that are not typically paid for with money.

Underground Economy

Buying and selling of goods and services that is concealed from the government to avoid taxes or regulations.

GDP Deflator

A measure of the price level, calculated by dividing nominal GDP by real GDP and multiplying by 100.

Components of GDP

Consumption, Investment, Government Purchases, and Net Exports.

Consumption (C)

Spending by households on goods and services, excluding new houses.

Investment (I)

Spending by firms on new factories, machinery, and new houses.

Government Purchases (G)

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

Net Exports (NX)

The value of exports minus the value of imports.