Chapter 7: Macroeconomic Measurements; Part II: GDP and Real GDP

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1.

Gross Domestic Product (GDP) Final Good Intermediate Good Double Counting Transfer Payment Consumption Investment

The total market value of all final goods and services produced annually within a country's borders. A good in the hands of its final user. A good that is an input to the production of a final good. Counting a good more than once when computing GDP. A payment to a person that is not made in return for goods and services currently supplied. The sum of spending on durable goods, nondurable goods, and services. The sum of all purchases of newly produced capital goods, changes in business inventories, and purchases of new residential housing. Changes in the stock of unsold goods. Business purchases of capital goods, such as machinery and factories, and purchases of new residential housing. Payments to persons that are not made in return for currently supplied goods and services. Total domestic (U.S.) spending on foreign goods. Total foreign spending on domestic (U.S.) goods. Exports minus imports. Total income earned by U.S. citizens and businesses, no matter where they reside or are located. National income is the sum of the payments to resources (land, labor, capital, and entrepreneurship): National income = Compensation of employees + Proprietors' income + Corporate profits + Rental income of persons + Net interest. The estimated amount of capital goods used up in production through natural wear, obsolescence, and accidental destruction. GDP minus the capital consumption allowance.

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Personal Income

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The amount of income that individuals actually receive. It is equal to national income minus undistributed corporate profits, social insurance taxes, and corporate profits taxes, plus transfer payments. The portion of personal income that can be used for consumption or saving. It is equal to personal income minus personal taxes (especially income taxes). The value of the entire output produced annually within a country's borders, adjusted for price changes. Increases in Real GDP. Recurrent swings (up and down) in Real GDP.

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Disposable Income

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Real GDP

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Economic Growth Business Cycle

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Inventory Investment Fixed Investment Government Transfer Payments Imports Exports Net Exports National Income

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Capital Consumption Allowance (Depreciation) Net Domestic Product (NDP)

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