Economics Chapter: Personal Income and Saving Rates

The total market value of all final goods and services produced within a given period by factors of production located within a country.

Goods and services produced for final use, not further processing or resale.

Goods produced by one firm to be used in further processing or resale by another firm.

The difference between the value of goods as they leave a stage of production and the cost of the goods as they entered that stage.

Data collected and published by the government describing the various components of national income and output in the economy.

The total market value of a country's output.

The government agency responsible for compiling national income and product accounts in the U.S.

It is the market value of all final goods and services produced within a given period of time by factors of production located within a country.

Summing up the value added at each stage of production or taking the value of final sales.

We do not count the value of total sales.

GDP only accounts for new goods and services, not old or used goods.

Transactions involving money or goods exchange without new goods or services production are excluded from GDP.

GDP measures output produced within a country's borders, regardless of who owns the factors of production.

Measures total market value of goods and services produced by factors of production owned by a country's citizens, regardless of location.

One method of calculating GDP by measuring total spending on final goods and services during a given period.

Spending by households on consumer goods, such as food, clothing, and entertainment.

Spending by firms and households on new capital, including factories, equipment, and new houses.

Spending by the government on goods and services, such as infrastructure, education, and defense.

The difference between the value of exports and imports.

The sum of consumption, investment, government purchases, and net exports.

The expenditure approach to calculating GDP adds up all spending on final goods and services in an economy.

It's the spending on durable goods, such as cars and appliances, nondurable goods like food and clothing, and services like healthcare and education.

The amount of spending that occurs in a country to increase productive capacity, consisting of nonresidential investment (factories, equipment), residential investment (new homes), and changes in inventory.

The total income of households.

The amount of disposable income that households choose to save.

The percentage of disposable income that is saved.

Personal income minus personal income taxes, representing the amount households have to spend or save.

The amount of disposable income left after total personal spending in a given period.

The total income earned by the factors of production owned by a country's citizens.

Includes wages, salaries, and various supplements - like employer contributions to social insurance and pension funds - paid to households by firms and by the government.

The income of unincorporated businesses.

The income received by property owners in the form of rent.

The income of corporations.

The interest paid by business.

Taxes such as sales taxes, customs duties, and license fees less subsidies that the government pays for which it receives no goods or services in return.

Net transfer payments by businesses to others.

A measure of the overall price level in an economy, calculated by dividing nominal GDP by real GDP and multiplying by 100.

The value of goods and services produced within a country's borders, regardless of who owns the factors of production.

An increase in social welfare is not always reflected in GDP. For example, a decrease in crime or an increase in leisure time may not increase GDP, but they certainly improve social welfare.

Activities like housework or child care are not typically included in GDP, as they are not exchanged in markets.

GDP doesn't tell us how the output is distributed among the population. A society with a very uneven distribution of wealth could have a high GDP, but many individuals could still be impoverished.