Chapter 8 Flashcards


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Macroeconomics
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1

Capital Consumption Allowance

Another name for depreciation, the amount that businesses would have to save in order to take care of the deterioration of machines and other equipment

2

Constant Dollars

Dollars expressed in terms of real purchasing power using a particular year as the base or standard of comparison, in contrast to current dollars

3

Depreciation

Reduction in the value of capital goods over a one0year period due to physical wear and tear and also to obsolescence; Asao called capital consumption allowance

4

Disposable Personal Income (DPI)

Personal In come after personal income taxes have been paid

5

Durable Consumer goods

Consumer goods that have a life span of more than three years

6

Expenditure Approach

Computing GDP by adding up the dollar value at current market prices of all final goods and services

7

Final Goods and Services

Goods and Services that are at their final stage of production and will not be transformed into yet other goods or services

8

Fixed Investment

Purchases by businesses of newly produce producer durable, or capital goods, such as production machinery and office equipment.

9

Foreign Exchange Rate

The price of one currency in terms of another

10

Gross Domestic Income (GDI)

The sum of all income- wages, interest rent and profits0 paid to the four factors of production

11

Gross Domestic Product (GDP)

The Total market of all final goods and services produced during a year by factors of production located within a nations borders

12

Gross Private Domestic Investment

The creation of capital goods, such as factories and machines, that can yield production and hence consumption in the future. Also include this definition are changes in business inventories and repairs made to machines or buildings.

13

Income apoproach

Measuring GDP by adding up all components oaf national income, including wages, interest, rent and profits

14

Indirect business taxes

All business taxes except the tax on corporate profits,. Indirect business taxes include sales and business property taxes

15

Intermediate goods

Goods used up entirely in the production of final goods

16

Inventory Investment

Changes in the stocks of finished goods and goods in process, as well as changes in the raw materials that businesses Kopp on hand. Whenever inventories are decreasing, inventory investment is negative. Whenever they are increasing inventory investment is positive.

17

Investment

Any use of today's resources to expand tomorrows production or consumption

18

National Income (NI)

The Total of all factor payments to resource owners. It can be obtained from net domestic product (NDP)by subtraction indirect business taxes and transfers and adding net U.S. income earned abroad and other business income adjustment.

19

National Income Accounting

A measurement system used to estimate national income and its components. One approach to measuring an economy aggregate performance.

20

Net Domestic Product (NDP)

GDP minus depreciation

21

Net investment

Gross Private domestic investment minus an estimate of the wear and tear on the existing capital stock. Measure the change in capital stock over one-year period.

22

Nominal values

Values of variables such as GDP and investment expressed in current dollars, also called money values, measurement in terms of actual market prices at which goods and services are sold

23

Nondurable consumer goods

Goods used by consumers that are used up within three years

24

Nonincome Expense items

The total of intercept business taxes and depreciation

25

Personal Income (PI)

The amount of income that households actually receive before they pay personal income taxes

26

Producer durable, or capital goods

Durable goods having expected service life of more than three years that are used by businesses to produce other goods and services

27

Purchasing Power Parity

adjustments in exchange rate conversions that take intone account differences in there truest cost of living across countries

28

Real Values

Measurement of economic values after adjustments have been made for changes in the average of prices between years

29

Services

Mental or physical labor or assistance purchased by consumers.

30

Total Income

The yearly amount earned by the nations resources (factors or production). Total income therefore includes wages, rent, interest payments, and profits that are received by workers landowners, capital owners, and entrepreneurs, respectively.

31

Value added

The dollar value of industry's sales minus the value of intermediate goods ( for example, raw materials and parts) used in production