55 terms

chapter 13

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Terms in this set (...)

Gross Domestic Product (GDP)
the dollar amount of all final goods and services produced within a country's borders in a year.
National Income Accounting
Measures the economy's performance by measuring the flows of income and expenditures.
Intermediate Products
products used to make another product
Secondhand Sales
the sales of used goods; not counted in GDP
Nonmarket Transactions
transactions that do not take place in the market-are excluded because they are so difficult to measure
Underground Economy
exchanges of goods and services that are not reported to the government and thereby escape taxation
Gross National Product (GNP)
a measure of the total value of the officially recorded goods and services produced by the citizens and corporations of a country in a given year
What is the main difference between GDP and GNP?
GNP includes value created by American firms off American soil.
Net National Product (NNP)
the aggregate measure of economic development that accounts for the depreciation of capital and natural resources
National Income (NI)
sum of the incomes that all individuals in the economy earned in the forms of wages, interest, rent and profits.
Personal Income (PI)
refers to salaries and wages as well as investment income and government payments to individuals
Disposable Personal Income (DI)
extra money that a person has after paying for all neccessities
Household
a person or a group of people that share their income
Unrelated Individual
a person who lives alone even though he or she may have family living else where.
Family
A group of 2+ persons related by blood, marriage or adoption who are living together in a household.
Output-Expendeture Model
microeconomic model used to show aggregate demand by the consumer, investment, government and foreign sectors.
Net Exports of Goods and Services
the value of exports of goods and services minus the value of imports of goods and services
Consumer Sector
largest part of economy; made up of households
Investment Sector
made up of bussiness
Government Sector
Provides services such as police, hospitals, schools, etc
Foreign Sector
represents all of the countries in the world
Inflation
a rise in the general level of prices
Price Index
a measurement that shows how the average price of a standard group of goods changes over time
Base year
The year serving as a point of comparison for other years in a price index.
Market Basket
a representative collection of goods and services
Consumer Price Index (CPI)
a measure of the overall cost of the goods and services bought by a typical consumer
Producer Price Index
measure of change in price over time that US producers change for goods and services
Implicit GDP Price Deflator
an index of average levels of prices for all goods and services in the economy
Current GDP
when GDP is not adjusted to remove the effects of inflation
Real GDP (GDP in constant dollars)
GDP adjusted to account for changes in currency values and price changes
What effect does inflation have on GDP?
distorts it
Why are Price Indices Important?
To be able to keep track of how the economy is shifting.
What is measured by real GDP?
Real GDP adjusts the GDP years to the base year.
Census
population count
Urban population
percentage of the total population living in towns of over 2,500 people(cities and towns)
Rural population
The percentage of people living in cities with a population less than 2,500
Center of population
the point where the country would balance if it could be laid flat and all the people weighed the same.
Demographers
Study the population of the world, and the birth rate, marriage rate, and death rate.
Fertility rate
# of babies born each year per 1,000 women in a population
Net immigration
the net change in population caused by people moving into and out of the country
Baby boom
the rapid population increase that took place bewteen 1945 and 1960
Population Pyramid
A bar graph representing the distribution of population by age and sex.
Dependency Ratio
the number of dependents, old or young, that each 100 persons in the economically productive years must on average support
Why is it good to express GDP on a per capita basis instead of total amount?
It adjusts for inflation and population.
How has the rate of growth been in the US?
decreasing
What is the trend in the US regarding size of households?
increase real per capita output enough to allow people to raise their standards of living.
The center of the US population has shifted from the west to the east.
.
Why is the retirement of the baby boomers likely to increase the dependency ration?
If too many people retire there whoun't be enough resources.
Real GDP per capita
real GDP divided by the total population
Growth triangle
a table that shows annual compound rates of growth between selected periods of time
Standard of living
level of economic prosperity
Tax Base
the maximum amount of earnings on which a tax is calculated
Renewable Resources
resources that can be replaced
Capital-to-labor ratio
the total capital stock divided by the number of workers in to produce more than they could otherwise.
Labor Productivity
the quantity of goods and services that can be produced by one worker or by one hour of work