ECON 8-9 Vocab

POTENTIAL-OUTPUT

Full employment output

RECESSION

Falling real GDP

SHORT-TERM-FLUCTUATIONS

Changes in real GDP shown in the business cycle

NOMINAL-GDP

GDP that does not account for changes in the price level

NOMINAL-GNI

GNI that does not account for changes in the price level

OECD-BETTER-LIFE-INDEX

A measure of economic activity that takes into account quality of life factors

PURCHASING-POWER-PARITY

Special exchange rates that eliminate the influence of price level differences across countries

NATURAL-RATE-OF-UNEMPLOYMENT

The unemployment rate when the economy produces at full employment output

NET-EXPORTS

The value of exports minus the value of imports

CONSUMPTION

Spending by consumers to buy goods and services

REAL-GNI

GNI that has eliminated the influence of changes in the price level

EXPENDITURE-APPROACH

Calculating nominal GDP by adding up the spending of all buyers in an economy

NOMINAL-VALUE

Value measured in terms of current prices

BUSINESS-CYCLE

Short-term fluctuations in economic activity

REAL-VALUE

Value measured in terms of constant prices

HAPPINESS-INDEX

A measure of economic activity that ranks countries according to the happiness of their populations

GROSS-DOMESTIC-PRODUCT

The value of output produced within the boundaries of a country

GROSS-NATIONAL-INCOME

All income received by the residents of a country

PRICE-DEFLATOR

Used to convert nominal values into real values

REAL-GDP

GDP that has eliminated the influence of changes in the price level

LONG-TERM-GROWTH

Growth of potential output in the business cycle over long periods of time

NATIONAL-INCOME-STATISTICS

Statistical data used to measure economic activity

INCOME-APPROACH

Calculating nominal GDP by adding up the payments to the four factors of production

GREEN-GDP

A measure of economic activity that includes environmental factors by considering the ecological footprint

OUTPUT-APPROACH

Calculating nominal GDP by adding the value of goods and services produced in all the sectors of an economy

PERCAPITA

Per person

INVESTMENT

Spending by firms to buy capital goods

AGGREGATE-DEMAND

The total quantity of goods and services all buyers in an economy want to buy

RECESSIONARY-GAP

Deflationary gap

INFLATIONARY-GAP

Equilibrium real GDP greater than potential GDP due to excess aggregate demand

DEFLATIONARY-GAP

Equilibrium real GDP less than potential GDP due to insufficient aggregate demand

SHORT-RUN-AGGREGATE-SUPPLY

The total amount of goods and services produced in an economy over a period when wages and other factor prices are constant

SHORT-RUN-AGGREGATE-SUPPLY-CURVE

The relationship between real GDP and the price level over a period when wages and other factor prices are constant

EQUILIBRIUM-LEVEL-OF-OUTPUT

The level of output where aggregate demand intersects aggregate supply

WEALTH

Things of value people own minus their debts

LONG-RUN-AGGREGATE-SUPPLY

A vertical aggregate supply curve at the level of potential output

SHORT-RUN-EQUILIBRIUM-LEVEL-OF-OUTPUT

Output produced when the AD curve intersects the SRAS curve

DETERMINANTS-OF-AGGREGATE-DEMAND

Factors that cause shifts of the aggregate demand curve

BUSINESS-CONFIDENCE

A measure of the degree of firms' optimism about the future of the economy

FULL-EMPLOYMENT-OUTPUT

Potential output

KEYNESIAN-AGGREGATE-SUPPLY-CURVE

An aggregate supply curve with three segments

LONG-RUN-AGGREGATE-SUPPLY-CURVE

The relationship between real GDP and the price level over a period when wages and other factors prices change to meet changes in the price level

CONSUMER-CONFIDENCE

A measure of the degree of consumer optimism about the future of the economy

LONG-RUN-EQUILIBRIUM-LEVEL-OF-OUTPUT

Output produced when the AD and SRAS curves intersect on the LRAS curve

INCOME-TAXES

Payments to the government based on the amount of income earned

AGGREGATE-DEMAND-CURVE

Relationship between total real output demanded by all buyers in an economy and the price level

AGGREGATE-SUPPLY

The total amount of goods and services produced in an economy

DETERMINANTS-OF-AGGREGATE-DEMAND Consumption

Changes in consumer confidence
Changes in interest rates
Changes in wealth
Changes in income taxes
Changes in the level of household Indebtedness
Expectations of future price levels

DETERMINANTS-OF-AGGREGATE-DEMAND Investment

Changes in Interest Rates
Changes (improvements) in technology
Changes in business taxes
The level of corporate indebtedness
Legal/institutional changes

DETERMINANTS-OF-AGGREGATE-DEMAND Government Spending

Changes in political priorities
Changes in economic priorities: deliberate efforts to influence aggregate demand

DETERMINANTS-OF-AGGREGATE-DEMAND Net Exports

Changes in national income abroad
Changes in exchange rates
Changes in trade policies, or the level of trade protection

DETERMINANTS-OF-AGGREGATE-SUPPLY Short-term

Factors that cause shifts of the aggregate supply curve

Changes in wages
Changes in non-labor resources prices
Changes in indirect taxes
Changes in subsidies offered to businesses
Supply shocks

DETERMINANTS-OF-AGGREGATE-SUPPLY Long-term

Increases in Quantities of the factors of production
Improvements in the quality of factors of production (resources)
Improvements in technology
Increase in efficiency
Institutional changes
Reductions in the natural rate of unemployment