12 largest economies in western Europe: Austria, Belgium, Denmark, Finland, France, Germany, Italy, Netherlands, Norway, Sweden, Switzerland,

United Kingdom. The major economic issues: Definitions Aggregation: The adding up of individual economic variables to obtain economy-wide totals. (The loss of detail is a cost of aggregation) Average Labor Productivity: Output per labor. Expansion: Period of slowdown in economic growth. Fiscal Policy: Decisions that determine the governments budget, including the amount and composition of government expenditures and government revenues. Inflation: The rate at which prices in general are increasing over time. Macroeconomic policies: Government actions designed to affect the performance of the economy as a whole. Macroeconomics: The study of the performance of national economies and the policies governments use to try to improve that performance. Monetary Policy: Control of the economys money supply or interest rates. Normative Analysis: Analysis that addresses the question of whether a policy should be used; normative analysis inevitably involves the vales of the person doing the analysis. Positive Analysis: Analysis that addresses the economic consequences of a particular event or policy, not whether those consequences are desirable. Recession: Periods of rapid economic growth. Stabilization Policies: Policies that moderate short-run fluctuations in economic activity. Structural Policy: Government policies aimed at changing the underlying structure, or institutions, of the nations economy. Economic growth and living standards Productivity Recessions and expansions Unemployment Inflation Economic interdependence among nations

Unemployment Rate: The percentage of the workforce who would like to be employed but cant find work. Gross Domestic Product (GDP): The market value of the final goods and services produced in a country during a given period. Final goods or Services: Goods or services consumed by the ultimate user; because they are the end products of the production process, they are counted as part of GDP. Intermediate Goods or Services: Goods or services used up in the production of final goods and services, and therefore not counted as part of GDP. Capital good: A long-lived good, which is itself produced and used to produced other goods and services. Value Added: For any firm, the market value of its product or service minus the cost of inputs purchased from other firms. Consumer expenditure (or consumption): Spending by households on goods and services, such as food, clothing and entertainment. Investment: Spending by firms on final goods and services, primarily capital goods and housing. Government purchases: Purchases by central and local governments of final goods and services; government purchases do no include transfer payments, which are payments made by the government in return for which no current goods or services are received, nor do they include interest paid on the government debt. Net Exports: Exports minus imports. Real GDP: A measure of GDP in which the quantities produced are valued at the prices in a base year rather than at current prices, real GDP measures the actual physical volume of production. Nominal GDP: A measure of GDP in which the quantities produced are valued at current-year prices; nominal GDP measures the current money value of production.