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Economics Ch.19
GDP: Measuring Total Production and Income
19
Economics
Undergraduate 1
12/06/2009

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Term
Business cycle
Definition
The study of the economy as a whole, including topics such as inflation, unemployment, and economic growth.
Term
Expansion
Definition
The period of a business cycle during which total production and total employment are increasing.
Term
Recession
Definition
The period of a business cycle during which total production and total employment are decreasing.
Term
Economic growth
Definition
The ability of an economy to produce increasing quantities of goods and services.
Term
Inflation rate
Definition
The percentage increase in the price level from one year to the next.
Term
Gross domestic product (GDP)
Definition
The market value of all FINAL goods and services produced in a country during a period of time, typically one year.
Term
Final good or service
Definition
A good or service purchased by a final user.
Term
Intermediate good or service
Definition
A good or service that is an input into another good or service, such as a tire on a truck.
Term
Transfer payments
Definition
Payments by the government to individuals for which the government does not receive a new good or service in return.
Term
Consumption
Definition
Spending by households on goods and services, not including spending on new houses.
Term
Investment
Definition
Spending by firms on new factories, office buildings, machinery, and additions to inventories, and spending by households on new houses.
Term
Government purchases
Definition
Spending by federal, state, and local governments on goods and services.
Term
Net exports
Definition
Exports minus imports.
Term
Value added
Definition
The market value a firm adds to a product.
Term
Underground economy
Definition
Buying and selling of goods and services that is concealed from the government to avoid taxes or regulations or because the goods and services are illegal.
Term
Nominal GDP
Definition
The value of final goods and services evaluated at current-year prices.
Term
Real GDP
Definition
The value of FINAL goods and services evaluated at base-year prices.
Term
Price level
Definition
A measure of the average prices of goods and services in the economy.
Term
GDP deflator
Definition
A measure of the price level, calculated by dividing nominal GDP by real GDP and multiplying it by 100.
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