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Questions and Answers
Questions and Answers
What is the definition of national income accounting?
What is the definition of national income accounting?
- A method for tracking personal income.
- A system that collects macroeconomic statistics on production, income, investment, and savings. (correct)
- A system that collects microeconomic statistics.
- A system for calculating consumer prices.
What does gross domestic product (GDP) represent?
What does gross domestic product (GDP) represent?
The dollar value of all final goods and services produced within a country's borders in a given year.
What are intermediate goods?
What are intermediate goods?
Goods used in the production of final goods.
What defines durable goods?
What defines durable goods?
What are nondurable goods?
What are nondurable goods?
What does nominal GDP measure?
What does nominal GDP measure?
What is real GDP?
What is real GDP?
What does gross national product (GNP) represent?
What does gross national product (GNP) represent?
What is depreciation?
What is depreciation?
What does price level refer to?
What does price level refer to?
What is aggregate supply?
What is aggregate supply?
What is aggregate demand?
What is aggregate demand?
What defines a business cycle?
What defines a business cycle?
What does expansion mean in economic terms?
What does expansion mean in economic terms?
What is economic growth?
What is economic growth?
What is a peak in the business cycle?
What is a peak in the business cycle?
What does contraction refer to in economics?
What does contraction refer to in economics?
What is a trough?
What is a trough?
What is a recession?
What is a recession?
What defines a depression?
What defines a depression?
What is stagflation?
What is stagflation?
What are leading indicators?
What are leading indicators?
What is real GDP per capita?
What is real GDP per capita?
What is capital deepening?
What is capital deepening?
What does saving mean?
What does saving mean?
What is the savings rate?
What is the savings rate?
What is technological progress?
What is technological progress?
Questions and Answers
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Study Notes
Study Notes
National Income Accounting
- Collects macroeconomic statistics on production, income, investment, and savings.
Gross Domestic Product (GDP)
- Represents the dollar value of all final goods and services produced within a country's borders within a year.
Intermediate Goods
- Goods utilized in the production process of final goods.
Durable Goods
- Products that have a relatively long lifespan.
Nondurable Goods
- Items that have a short lifespan.
Nominal GDP
- Measures GDP in current prices, reflecting the economic value at the time of measurement.
Real GDP
- Expresses GDP in constant prices, adjusting for inflation and providing a more accurate economic value.
Gross National Product (GNP)
- Total annual income earned by U.S.-owned firms and citizens, including international activities.
Depreciation
- Represents the decline in the value of capital equipment due to normal wear and tear over time.
Price Level
- The average of all prices prevailing in the economy at a given time.
Aggregate Supply
- The total volume of goods and services available in the economy at varying price levels.
Aggregate Demand
- The total quantity of goods and services that will be purchased across all price levels in the economy.
Business Cycle
- Describes the fluctuating periods of macroeconomic expansion followed by contraction.
Expansion
- Indicates a phase of economic growth characterized by an increase in real GDP.
Economic Growth
- A consistent, long-term increase in real GDP, reflective of an improving economy.
Peak
- The summit of economic expansion, marking the point when real GDP ceases to rise.
Contraction
- A decline in economic activity, evidenced by decreasing real GDP.
Trough
- The lowest point in an economic contraction, where real GDP halts its decline.
Recession
- A significant and prolonged period of economic contraction.
Depression
- A severe and extended recession, marked by notable economic downturns.
Stagflation
- A unique economic condition where there is a decline in real GDP alongside rising price levels.
Leading Indicators
- Key economic variables that help economists forecast upcoming business cycle phases.
Real GDP per Capita
- Calculated by dividing real GDP by the total population, reflecting average economic output per person.
Capital Deepening
- The process of increasing the quantity of capital available per worker, enhancing productivity.
Saving
- Refers to income that is not allocated for consumption.
Savings Rate
- The percentage of disposable income that individuals save rather than spend.
Technological Progress
- Represents gains in efficiency where more output is produced without increasing the amount of input used.
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