gross domestic product (GDP)
the total value of final goods and services produced within a nation's borders in a given time period.
nominal GDP
the value of output measured in current prices.
real GDP
the inflation-adjusted value of GDP: the value of output measured in constant prices.
per capita GDP
total GDP divided by total population: average GDP.
economic growth
an increase in output (real GDP); an expansion of production possibilities.
investment
expenditures on (production of) new plant and equipment (capital) in a given time period, plus changes in business inventories.
income transfers
payments to individuals for which no current goods or services are exchanged; e.g., Social Security, welfare, unemployment benefits.
exports
goods and services sold to foreign buyers.
imports
goods and services purchased from foreign sources.
factors of production
resource inputs used to produce goods and services, e.g., land, labor, capital, entrepreneurship.
capital intensive
production processes that use a high ratio of capital to labor inputs.
productivity
output per unit of input, e.g., output per labor hour.
human capital
the knowledge and skills possessed by the workforce.
monopoly
a firm that produces the entire market supply of a particular good or service.
externalities
costs (or benefits) of a market activity borne by a third party.
person distribution of income
the way total personal income is divided up among households or income classes.
progressive tax
a tax system in which tax rates rise as incomes rise.
regressive tax
a tax system in whcih tax rates fall as incomes rise.