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
Stock
a share in the ownership of a company held by a shareholder
Bond
borrowing in the form of an IOU that pays interest
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 mius taxes, the total amount of household income available to spend on consumption and to save
Private Savings
disposable income that is not spent on consumption (equal to disposable income minus consumer spending)
Financial Markets
banking, stock, and bond markets, which channel private savings and foreign ledning into investment spending, government borrowing, and foreign borrowing
Government borrowing
the amount of funds borrowed by the government in the financial markets
Government purchases of goods and services
total expenditures on goods and services by federal, state,and local governments
Exports
goods and services sold to other countries
Imports
Goods and services purchased from other countries
Inventories
stocks of goods and raw materials held to facilitate business operations
Investment Spending
spending on productive physical capital, such as machinery and construction of structures, and on changes to inventories
Final goods and services
goods and services sold to the final, and or end, user
Gross domestic product (GDP)
the 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 imports, is the total spending on domestically produced final goods and services in the economy
Value Added
the value of a producer's sales minus the value of its purchases of inputs
Net Exports
the differences between the value of exports and the value of imports
Aggregate Output
the economy's total quantity of output of final goods and services
Real GDP
the 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
the 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
Chained Dollars
the 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
CDP per capita
GDP divided by the size of the population; it is equivalent to the average GDP per person
Aggregate Price Level
a measure of the overall level of prices in the economy
Market basket
a 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 the cost is normalized so that it is equal to 100 in the selected base year
Inflation Rate
the 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
100 times the ratio of nominal GDP to real GDP in a certain year