Macroeconomics Chapters 23 & 24 Terms

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Section 1

Question Answer
Business cycleLong run growth and short run fluctuations in employment and ouput
Real GDPReflects changes in price (NWEA range requirement goes up every year)
Nominal GDPUses prevailing price (taking NWEA every year with no range)
Financial InvestmentInvestments that households participate in (stocks and bonds)
Economic InvestmentCreation and expansion of business
ShocksYou expect one thing and the opposite happens
InventoryStore of output that hasn't been sold yet
Inflexible/sticky pricesDon't react quickly to changes in supply and deman
Flexible pricesReact within seconds to supply and demand

Section 2

Question Answer
National income accountingRecording national growth to assess economic health
Intermediate goodsProducts that are bought for re-sale or further development
Multiple countingGDP that includes the worth of intermediate goods
Value Added=Market value of input-value of inputs bought from others
Income ApproachGDP is the profit businesses make from selling goods
Price IndexPrice of a specified collection of goods and services
Net Private Domestic InvestmentOnly investment in the form of added capital
National IncomeAll sources of private income and government revenue on taxes

Section 3

Question Answer
Personal Consumption Expenditures (C)All expenditures from households on goods and services
Gross Private Domestic Investment (Ig)Inventory change, all construction, all purchases by businesses of resources
Net exports (Xn)Exports minus imports
Government Purchases (G)Government consumption expenditures and gross investment
Personal IncomeAll money received
Disposable IncomeMoney you have left after taxes
Consumption of Fixed CapitalHuge depreciation charge against all capital each year