ap econ unit 2 vocab

National Income and Product Accounts

a system that measures a country’s overall economic activity including income

National Accounts

records that track a nation’s economic performance such as production

Household

an individual or group of people who share income and make consumption decisions

Firm

a business that produces goods or services for sale

Product Markets

markets where goods and services are bought and sold

Factor Markets

markets where resources like labor

Consumer Spending

money households spend on goods and services

Stock

a share representing partial ownership in a company

Bond

a loan made to a government or corporation that pays interest over time

Government Transfers

payments made by the government to individuals without receiving goods or services in return

Disposable Income

income households have left after paying taxes

Private Savings

disposable income that households do not spend

Financial Markets

markets where stocks

Government Borrowing

money the government raises by selling bonds

Government Purchases of Goods and Services

spending by the government on items it uses to provide public services

Exports

goods and services produced domestically and sold to other countries

Imports

goods and services produced in other countries and bought domestically

Inventories

unsold goods that firms have produced but not yet sold

Investment Spending

spending on capital goods such as machinery

Final Goods and Services

goods and services sold to the end user

Intermediate Goods and Services

goods and services used to produce final goods

Gross Domestic Product

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

Aggregate Spending

total spending in an economy on goods and services

Value Added

the additional value created at each stage of production

Net Exports

exports minus imports

Aggregate Output

the total quantity of goods and services produced in an economy

Real GDP

GDP adjusted for inflation

Nominal GDP

GDP measured using current prices

Chain-linking

a method of calculating real GDP that adjusts for changes in prices and spending patterns

GDP Per Capita

GDP divided by the population

Employed

people who have a job or are temporarily absent from one

Unemployed

people without a job who are actively looking for work

Labor Force

the total number of employed and unemployed people

Labor Force Participation Rate

the percentage of the working-age population in the labor force

Unemployment Rate

the percentage of the labor force that is unemployed

Discouraged Worker

someone who wants a job but has stopped looking due to lack of opportunities

Marginally Attached Workers

people who are not in the labor force but have looked for work recently

Underemployed

workers who have jobs but want more hours or better employment

Job Search

the process of looking for employment

Frictional Unemployment

short-term unemployment as people move between jobs

Structural Unemployment

unemployment caused by changes in the economy that make skills obsolete

Efficiency Wages

wages set above market level to increase worker productivity

Natural Rate of Unemployment

the normal level of unemployment including frictional and structural unemployment

Cyclical Unemployment

unemployment caused by economic downturns

Real Wage

wages adjusted for inflation

Real Income

income adjusted for changes in price levels

Inflation Rate

the percentage increase in the overall price level over time

Shoe-leather Costs

the costs of reducing cash holdings due to inflation

Menu Costs

the costs firms face when changing prices

Unit-of-Account Costs

confusion and inefficiency caused by inflation making prices harder to compare

Nominal Interest Rate

the stated interest rate not adjusted for inflation

Real Interest Rate

the nominal interest rate adjusted for inflation

Disinflation

a decrease in the rate of inflation

Aggregate Price Level

the average level of prices in the economy

Market Basket

a selected group of goods and services used to track price changes

Price Index

a measure that shows how prices change over time

Consumer Price Index (CPI)

a measure of the average price change of goods and services bought by households

Producer Price Index (PPI)

a measure of average price changes received by producers

GDP Deflator

a price index that measures changes in prices of all goods and services included in GDP