Chapter 23 - Measuring A Nation's Income

Vocabulary
Microeconomics


 * Definition: The study of how households and firms make decisions and how they interact in markets.

Macroeconomics
 * What It Means:


 * Definition: The study of economy-wide phenomena, including inflation, unemployment, and economic growth.

Gross Domestic Product (GDP)
 * What It Means:


 * Definition: The market value of all final goods and services produced within a country in a given period of time.

Consumption
 * What It Means:


 * Definition: Spending by households on goods and services, with the exception of purchases of new housing.

Investment
 * What It Means:


 * Definition: Spending on capital equipment, inventories, and structures, including household purchases of new housing.

Government Purchases
 * What It Means:


 * Definition: Spending on goods and services by local, state, and federal governments.

Net Exports
 * What It Means:


 * Definition: Spending on domestically produced goods by foreigners (exports) minus spending on foreign goods by domestic residents (imports).

Nominal GDP
 * What It Means:


 * Definition: The production of goods and services valued at current prices.

Real GDP
 * What It Means:


 * Definition: The production of goods and services valued at constant prices.

GDP Deflator
 * What It Means:


 * Definition: A measure of the price level calculated as the ratio of nominal GDP to real GDP times 100.


 * What It Means: