Ch 18

Gross Domestic Product (GDP)

Market value of all final goods and services produced in a country in one year.

Final Good

A good sold to the final user.

Intermediate Good

A good used to make another good.

Consumption

Household spending on goods and services.

Investment

Spending on capital goods and new housing.

Government Purchases

Government spending on goods and services.

Net Exports

Exports minus imports.

Transfer Payments

Government payments with no good or service exchanged.

Underground Economy

Economic activity hidden from the government and not included in GDP.

Nominal GDP

GDP measured using current-year prices.

Real GDP

GDP measured using base-year prices.

Price Level

Average level of prices in the economy.

GDP Deflator

Nominal GDP divided by real GDP times 100.