Sections
Key Terms
Key Terms
- business cycle
- the relatively short-term movement of the economy in and out of recession
- depreciation
- the process by which capital ages over time and therefore loses its value
- depression
- an especially lengthy and deep decline in output
- double counting
- a potential mistake to be avoided in measuring GDP, in which output is counted more than once as it travels through the stages of production
- durable good
- a long-lasting good like a car or a refrigerator
- exchange rate
- the price of one currency in terms of another currency
- final good and service
- output used directly for consumption, investment, government, and trade purposes; contrast with intermediate good
- GDP per capita
- GDP divided by the population
- gross domestic product (GDP)
- the value of the output of all goods and services produced within a country in a year
- gross national product (GNP)
- includes what is produced domestically and what is produced by domestic labor and business abroad in a year
- intermediate good
- output provided to other businesses at an intermediate stage of production, not for final users; contrast with final good and service
- inventory
- goods that have been produced but not yet been sold
- national income
- includes all income earned: wages, profits, rent, and profit income
- net national product (NNP)
- GDP minus depreciation
- nominal value
- the economic statistic actually announced at that time, not adjusted for inflation; contrast with real value
- nondurable good
- a short-lived good like food and clothing
- peak
- during the business cycle, the highest point of output before a recession begins
- real value
- an economic statistic after it has been adjusted for inflation; contrast with nominal value
- recession
- a significant decline in national output
- service
- a product that is intangible (in contrast to goods) such as entertainment, healthcare, or education
- standard of living
- all elements that affect people’s happiness, whether these elements are bought and sold in the market or not
- structure
- a building used as a residence, factory, office building, retail store, or other facility
- trade balance
- the gap between exports and imports
- trade deficit
- exists when a nation's imports exceed its exports and is calculated as imports–exports
- trade surplus
- exists when a nation's exports exceed its imports and is calculated as exports–imports
- trough
- during the business cycle, the lowest point of output in a recession, before a recovery begins