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AP Macroeconomics
Test # 2
36
Economics
12th Grade
02/15/2017

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Term
National Income and Product Accounts
{National Accounts)
Definition
These accounts, under the Bureau of Economic Analysis, keep track of the flows of money between different sectors of the economy.
Term
Circular-Flow Diagram
Definition
This diagram is a simplified representation of the macroeconomy. It shows the flows of money, goods and services, and factors of production through the economy. It allows us to visualize the key concepts behind the national accounts.
Term
Household
Definition
A person or group of people who share income.
Term
Firm
Definition
An organization that produces goods and services for sale.
Term
Product Markets
Definition
Markets where goods and services are bought an sold.
Term
Factor Markets
Definition
Markets where resources, especially capital and labor, are bought and sold.
Term
Consumer Spending
Definition
Household spending on goods and services
Term
Stocks
Definition
Shares in the ownership of a company held by a shareholder.
Term
Bonds
Definition
Loans to firms in the form of an IOU that pays interest.
Term
Government Transfers
Definition
Payments that the government makes to individuals without expecting a good or service. (Ex. unemployment insurance payments)
Term
Disposable Income
Definition
Equal to income plus government transfers minus taxes, the total amount of household income available to spen on consumption and to save.
Term
Private Savings
Definition
Equals to disposable income minus the consumer spending, the disposable income that is not spent on consumption.
Term
Financial Markets
Definition
The banking, stock, and bond markets, which channel private savings and foreign spending, government borrowing, and foreign borrowing.
Term
Government Borrowing
Definition
The amount of funds borrowed by the government in the financial markets.
Term
Government Purchases of Goods and Services
Definition
The total expenditures on goods and services by federal, state, and local governments.
Term
Exports
Definition
Goods and services sold to other countries.
Term
Imports
Definition
Goods and services purchased from other countries.
Term
Inventories
Definition
Stocks of goods and raw materials held to facilitate business operations.
Term
Investment Spending
Definition
Spending on new productive physical capital, such as machinery and structures, and on changes in inventories.
Term
Final Goods and Services
Definition
Goods and services sold to final, or end, user.
Term
Intermediate Goods and Services
Definition
Goods and services bought from one firm by another firm to be used as inputs into the production of final goods and services.
Term
Gross Domestic Product
GDP
Definition
The total value of all final goods and services produces in the economy during a given year.
Term
Aggregate Spending
Definition
The total spending on domestically produced final goods and services in the economy - is the sum of consumer spending(C), investment spending (I), government purchases of goods and services (G), and exports minus imports (net exports = X - IM = NX).
Term
GDP = C + I + G + X − IM
or
GDP = C + I + G + NX
Definition
C = Consumer Spending
I = Investment Spending
G = government purchases of goods and services
X = Exports
IM = Imports
NX = Net Exports
Term
Net Exports
Definition
The differences between the value of exports and the value of imports (X - IM).
Term
Included in GDP
Definition
Domestically produced final goods and services, including capita goods, new construction of structures, and changes to inventories.
Term
Not Included in GDP
Definition
- Intermediate goods and services
- Inputs
- Used goods
- Financial assets such as stocks and bonds
- Foreign-produced goods and services
Term
Difference between Investment Goods and Input?
Definition
An input, like steel, is used up in production. An investment good, like a metal-stamping machine, is not.
Term
Aggregate Output
Definition
The total quantity of final goods and services produced within an economy.
Term
Real GDP
Definition
The total value of all final goods and services produced in the economy during a given year, calculated using the prices of selected base year.
RGDP = (nominal GDP)/price level
RDGP = (price level)(amount of item)
Term
Nominal GDP
Definition
The total value of all final goods and services produced in the economy during a given year, calculated with the prices current in the year in which the output is produced.
Term
Chain-linking
Definition
The method of calculation changes in the real GDP using the average between the growth rate calculated using the early base year and the growth rate calculated using a late base year.
Term
GDP per capita
Definition
GDP divided by the size of the population; it is equivalent to the average GDP per person.
Term
Employed
Definition
People currently holding a job in the economy, either full time or part time.
Term
Unemployed
Definition
People actively looking for work but aren't currently employed.
Term
Labor Force
Definition
Equal to the sum of the employed and the unemployed.
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