Term
| Gross Domestic Product (GDP) |
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Definition
| The total vale of goods and services produced in an economy, is the broadest measure of economic activity. |
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| An accounting system to measure economic activity and its components, shows the relationship among the expenditure, income, and production methods of measuring GDP. |
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| A technique for computing GDP as the current market value of all final goods and services newly produced in the economy during a fixed period of time. |
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| Goods and services that are produced and hidden from the government, wither because they are illegal (drugs or prostitution) or because the person producing the goods or service is avoiding paying taxes on the income he or she receives. These are not included into the GDP |
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| An estimate of what the price of the good or service would be if it were traded in the market |
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| Intermediate goods and services |
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Definition
Used up entirely in the stages of production.
1 of the two stages in production of goods and services |
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End goods in the production process.
1 of the two stages in production of goods and services |
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An important technique for calculating the value of all final goods and services produced in the economy.
The value of a firms output minus the cost of the intermediate goods and services purchased by the firm. |
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| A good that is produced in the current period to be used in the production of other goods and that is not used up in the stages of production |
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| Firms holdings of raw materials, unfinished goods, and unsold finished goods are another type of good that is not used up in the current period |
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| The change in inventories over a given period of time(say a year) |
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| An amount per a given unit of time |
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A quantity at a given point in time
Not a Common Stock (share of apple) |
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| A technique for computing GDP by measuring the total spending on currently produced finial goods and services in the economy. |
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| Defines GDP as the sum of consumption expenditure, investment, government purchases , and net exports , that is Y=C+I+G+NX |
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Y- GDP= Total Production Output
C- Consumption Expenditure
I-Investment
G-Government purchases of goods and services
NX- net exports = Exports-imports |
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| Consumption Expenditure (Personal Consumption Expenditure and Consumption) |
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| The total spending for currently produced consumer goods and services. Largest component of GDP |
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Spending on currently produced capital goods that are used to produce goods and services over an extended period of time.
Fixed Investment
Inventory Investment
Residential Investment |
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| (Business Fixed investment) Is spending by business on equipment (machines, computers, furniture, and trucks and structures (factories, stores, and warehouses.) |
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| The change in inventories held by firms. If inventories are increasing, inventory investments is positive, but if they are decreasing, inventory investment is negative |
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| Household purchases of new houses and apartments. Do not include purchases of existing housing in GDP. Houses and apartments are capital goods for households because they produce a service over an extended period of time. |
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| Spending by the government whether, federal, state, or local on currently produced goods and services. |
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| Government purchases for current goods and services like health care and police |
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| Spending on capital goods and services like highways and schools that add to the capital stock and promote economic growth. |
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| Government payments for social security medicare and unemployment insurance benefits. |
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| Exports minus imports : the value of currently produced goods and services exported or sold to other countries, minus the value of goods and services imported , or purchased from abroad |
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