national income and product accounts
national accounts; keep track of the flows of money between different sectors of the economy
consumer spending
household spending on goods and services
government transfers
payments by the government to individuals for which no good or service is provided in return
disposable income
equal to income plus government transfers minus taxes, is the total amount of household income available to spend on consumption and to save
private savings
equal to disposable income minus consumer spending, is disposable income that is not spent on consumption
financial markets
banking, stock, and bond markets, which channel private savings and foreign lending into investment spending, government borrowing, and foreign borrowing, are known as financial market s
government borrowing
total amount of funds borrowed by federal, state, and local governments in the financial markets.
government purchases of goods and services
total expenditures on goods and services by federal, state, and local governments
inventories
stocks of goods and raw material held to facilitate business operations
investment spending
spending on productive physical capital, such as machinery and construction of buildings, and on changes to inventories
final goods and services
goods and services sold to the final, or end, user
intermediate goods and services
goods and services - bought from one firm by another firm - that are inputs for production of final goods and services
gross domestic product (GDP)
total value of all final goods and services produced in the economy during a given year
aggregate spending
the sum of consumer spending, investment spending, government purchases of goods and services, and exports minus important, is the total spending on domestically produced final goods and services in the economy
value added
of a producer is the value of its sales minus the value of its purchases of intermediate goods and services
net exports
difference between the value of exports and the value of imports
aggregate output
economy's total quantity of output of final goods and services
real gdp
total value of all final goods and services produced in the economy during a given year, calculated using the prices of a selected base year
nominal gdp
value of all final goods and services produced in the economy during a given year, calculated using the prices current in the year in which the output is produced
GDP per capita
GDP divided by the size of the population; it is equivalent to the average GDP per person
aggregate price level
measure of the overall level of prices in the economy
market basket
hypothetical set of consumer purchases of goods and services
price index
measures the cost of purchasing a given market basket in a given year, where that cost is normalized so that it is equal to 100 in the selected base year
inflation rate
percent change per year in a price index - typically the consumer price index.
consumer price index (CPI)
measures the cost of the market basket of a typical urban American family
producer price index (PPI)
measures changes in the prices of goods purchased by producers
GDP deflator
for a given year is 100 times the ratio of nominal GDP to real GDP in that year
chained dollars
method of calculating changes in real GDP using the average between the growth rate calculated using an early base year and the growth rate calculated using a late base year