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Econ12
Chapter 12
18
Economics
Undergraduate 2
12/03/2012

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Term
Macroeconomics
Definition
Studies the economy as a whole
Term
Business cycle
Definition
refers to alternating periods of economic expansion and economic recession.
Term
Expansion
Definition
a period during which production and employment are increasing
Term
recession
Definition
a period during which production and employment are decreasing
Term
Economic growth
Definition
refers to the ability of the economy to produce increasing quantities of goods and services
Term
Inflation rate
Definition
percentage increase in the price level from one year to the next
Term
Gross domestic product(GDP)
Definition
measurement of total production consisting of all final goods and services produced in an economy during a period of time, also toatl income, four major categories of expenditures: consumption investment, government purchases, and net exports
Term
Final Good or Service
Definition
purchased by a final user
Term
Intermediate good or service
Definition
an input into another good or service and is not included in GDP
Term
Transfer Payments
Definition
not include in GDP, they are payments to individuals for which the government does not receive a good or service in return.
Term
Value added
Definition
GDP can be calculated by adding up the value of every firm involved in producing final good and services.
Term
Underground economy
Definition
consists of concealed buying and selling
Term
Nominal GDP
Definition
value of final goods and services evaluated at current year prices
Term
real GDP
Definition
value of final goods and services evaluated at base-year prices
Term
Price Level
Definition
average price of goods and services in the economy
Term
GDP deflator
Definition
measure of the price level and is calculated by dividing nominal gdp by real gdp and multiplying by 100
Term
Consumption
Definition
expenditures made by households spent on services,non durable goods (food, and durable goods like cars
Term
Gov. purchases
Definition
spending by federal state and local governments on goods and services
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