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words from ap macro
Product Market
markets where goods and services are bought and sold
Consumer Spending
household spending on goods and services
Factor Market
markets where resources, especially capital and labor, are bought and sold
Government Spending
total expenditures on goods and services by federal, state, and local governments
Tax Revenue
the total amount of funds the government receives from taxes
Disposable Income
equal to income - taxes, this is the total amount of household income available to spend on consumption.
Government Transfers
payments that the government makes to individuals without expecting a good or service in return
Private Savings
equal to disposable income - consumer spending, this is a household's disposable income that is not spent on consumption
Financial Markets
channel private savings into investment spending and government borrowing
Government Borrowing
the amount of funds borrowed by the government in the financial markets
Investment Spending
spending by firms on new productive physical capital, such as machinery and structures, and changes in inventories
Inventories
stocks of goods and raw materials held to facilitate business operations
Exports
goods and services sold to other countries
Imports
goods and services purchased from other countries
Gross Domestic Product (GDP)
the total value of all final goods and services produced in the economy during a given year
Intermediate Goods
goods and services bought from one firm by another firm to be used as inputs into the production of goods and services
Final Goods
goods and services sold to the final, or end, user
Employed
people currently holding a job in the economy, either part-time or full-time
Unemployed
people who are actively looking for work but aren't currently employed
Labor Force
equal to the sum of the employed and the unemployed
Discouraged Workers
nonworking people who are capable of working but have given up looking for a job due to the state of the job market
Natural Rate of Unemployment
the unemployment rate that arises from the effects of frictional plus structural unemployment
Inflation
a rising overall price level
Deflation
a falling overall price level
Disinflation
the process of bringing the inflation rate down
Real Wage
the wage rate divided by the price level to adjust for the effects of inflation or deflation
Real Income
income divided by the price level to adjust for the effects of inflation or deflation
Price Level
the measure of overall prices in the economy
Consumer Price Index
measures the cost of the market basket of the typical urban American family
Nominal Interest Rate
the interest rate actually paid for a loan
Real Interest Rate
the nominal interest rate minus the rate of inflation
GDP Deflator
measuring and adjusting the nominal GDP for changes in the price level over time
GDP per capita
GDP divided by the total population; it is equivalent to the average GDP per person
Economic Growth
an increase in the maximum amount of goods and services that an economy can produce
Full-Employment Output
the level of real GDP the economy can produce when all resources are fully employed
Potential Output
what an economy can produce when operating at maximum sustainable employment (that is, the natural rate of unemployment)
Output Gap
the difference between actual output and potential output
Note 
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