Unit 2 Vocab Econ

National Income and Product Accounts

Records that track the flow of money, production, and income in the economy

National Accounts

The overall system of economic accounts measuring transactions among households, firms, government, and the world

Household

A unit that consumes goods and services and supplies resources

Firm

An organization that produces goods and services using resources

Product Markets

Markets where goods and services are bought and sold

Factor Markets

Markets where productive resources (land, labor, capital) are exchanged

Consumer Spending

Household expenditures on goods and services

Stock

A financial asset representing ownership in a corporation

Bond

A financial asset representing a loan with interes

Government Transfers

Payments made by government without exchange of goods or services

Disposable Income

Income left after taxes and transfers, available to spend or save

Private Savings

Disposable income not spent on consumption

Financial Markets

Systems that channel savings into investment through assets like stocks and bonds

Government Borrowing

Funds borrowed by government to cover budget deficits

Government Purchases of Goods and Services

Government spending on goods and services, excluding transfers.

Exports

Goods and services produced domestically and sold abroad

Imports

Goods and services produced abroad and purchased domestically

Inventories

Stocks of goods held for future sale or production use

Investment Spending

Spending on new capital goods and changes in inventories

Final Goods and Services

Goods and services consumed by the end user

Intermediate Goods and Services

Goods used to produce final goods, not counted in GDP

Gross Domestic Product

The total value of all final goods and services produced in a country in a year

Aggregate Spending

Total spending on domestically produced final goods and services

Value Added

A firm’s output value minus the cost of intermediate inputs

Net Exports

Exports minus imports

Aggregate Output

The economy’s total production of goods and services

Real GDP

GDP adjusted for inflation to reflect actual output

Nominal GDP

GDP measured in current prices without adjusting for inflation

Chain-linking

A method of calculating real GDP by averaging growth rates with changing base year

GDP Per Capita

Real GDP divided by the population, measuring average output per person

Employed

People currently working for pay

Unemployed

People not working but actively seeking employment

Labor Force

The sum of employed and unemployed individuals

Labor Force Participation Rate

The share of the adult population in the labor force

Unemployment Rate

The percentage of the labor force unemployed

Discouraged Worker

A person who stops job-seeking due to lack of opportunities

Marginally Attached Workers

Individuals wanting work but not recently searching

Underemployed

Workers employed part-time or below their skill level

Job Search

The process of seeking suitable employment

Frictional Unemployment

Short-term unemployment from normal job matching

Structural Unemployment

Unemployment caused by mismatches between skills and jobs

Efficiency Wages

Wages above equilibrium to improve worker performance

Natural Rate of Unemployment

The unemployment rate from frictional and structural causes when the economy is stable

Cyclical Unemployment

Unemployment caused by economic downturns

Real Wage

Wages adjusted for inflation, reflecting purchasing power

Real Income

Income adjusted for inflation, showing true buying power

Inflation Rate

The annual percentage rise in the general price level

Shoe-leather Costs

Costs of managing money holdings under inflation

Menu Costs

Costs of changing listed prices

Nominal Interest Rate

Economic distortions caused by inflation reducing money’s reliability

Real Interest Rate

The interest rate before adjusting for inflation

Disinflation

The nominal rate minus the inflation rate

Aggregate Price Level

A decline in the rate of inflation

Market Basket

A fixed list of goods used to measure price changes

Price Index

A fixed list of goods used to measure price changes

Consumer Price Index (CPI)

A measure comparing current prices to a base year

Producer Price Index (PPI)

A price index measuring the cost of a typical consumer’s basket

GDP Deflator

A price index measuring overall inflation, calculated as nominal GDP ÷ real GDP × 100