Macro Chapter 6 and 10 - Supply, Demand, and Government Policies and Measuring a Nations Incone

Price ceiling

a legal maximum on the price at which a good can be sold

price floor

a legal minimum on the price at which a good can be sold

tax incidence

the manner in which the burden of a tax is shared among participants in a market

microeconomics

the study of how households and firms make decisions and how they interact in markets

macroeconomics

the study of economy wide phenomena, including inflation, unemployment, and economic growth

Gross Domestic Product

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

consumption

spending by households on goods and services, with the exception of purchases of new housing

Investment

spending on business capital, residential capital, and inventories

Government Purchases

spending on goods and services by local, state, and federal governments

Net Exports

spending on domestically produced goods by foreigners (exports) minus spending on foreign goods by domestic residents (imports)

Nominal GDP

the production of goods and services valued at current prices

real GDP

the production god goods and services valued at constant prices

GDP Deflator

a measure of the price level calculated as the ratio of nominal GDP to real GDP times 100