Principles of Macroeconomics (Mankiw) Chapter 10
Inflation
The rate at which prices are rising
Macroeconomics
The study of economy-wide phenomena
Microeconomics
The study of how households and firms make decisions and how they interact in markets
Gross Domestic Product (GDP)
Market value of all final goods and services within a country in a given period of time
Real GDP
The production of goods and services valued at base-year prices
Nominal GDP
The production of goods and services valued at current prices
Depreciation
Value off worn-out equipment and structures
Consumption (PCE)
Spending by households on goods and services, excluding new housing
Investment
Spending on capital equipment, inventories, and structures, including household purchases of new housing
Government Purchases (G)
Spending on goods and services by all levels of government
Net Exports (NX)
Spending on domestically produced goods by foreigners (exports) minus spending on foreign goods by domestic residents (imports)
Consumer Price Index
The ratio of the value of the fixed basket purchased by the typical consumer to the basket’s value in the base year multiplied by 100
GDP Deflator
The ratio of nominal GDP to real GDP multiplied by 100
Gross National Product (GNP)
is the market value of all the products and services produced in one year by labour and property supplied by the citizens of a country
total income
Wages, rent, and profit
total expenditure
consumption, investment, government purchases and net exports
intermediate production
goods that are produced by one firm to be further processed by another firm
Final production
Finished products sold to the end user
Transfer payment
expenditures by government for which they receive no goods or services
Base year
the year from which prices are used to measure real GDP
Recession
A period of decline in GDP