AP Micro Quiz 1 study set

GDP (Gross Domestic Product)

the total market value of all final goods and services produced annually in an economy

Equation for GDP

Y = C + I + G + NX (X-M)

C in the GDP equation stands for:

consumption

I in the GDP equation stands for:

Investment

G in the GDP equation stands for:

government

NX in the GDP Equation stands for:

net exports

What are net exports?

exports - imports

Nominal GDP

GDP measured in current prices

Real GDP

GDP adjusted for inflation

Real GDP per capita

real GDP divided by the total population of a country

What comes right before a recession in the business cycle?

A peak

Inflation

A general and progressive increase in prices

Deflation

a decrease in the general level of prices

Stagflation

When the economy is declining but prices are still rising.