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National income accounting
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a way of evaluating a country's economy using statistical measures of its income, spending, and output
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Gross Domestic Product (GDP)
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the market value of all final goods and services produced within a nation in a given time period
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Consumption
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all spending by households on durable goods, honorable goods, and services
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Investment
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measures what businesses spend
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Government spending
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all the expenditures of federal, state, and local government on goods and services
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Net exports
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the final component of GDP that represents foreign trade
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Gross national product (GNP)
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the market value of all final goods and services produced by a country
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Personal income (PI)
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the income received by a country's people from all sources
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Disposable Personal Income (DPI)
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personal income minus taxes
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Business cycle
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the series of growing and shrinking periods of economic activity, measured by increases or decreases in real GDP
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Economic growth
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the increase in a nation's real GDP over a period of time
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Expansion
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real GDP grows from a low point, or trough
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Recession
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a prolonged economic contraction lasting two or more quarters (six months or more)
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Depression
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an extended period of high unemployment and reduced business activity
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Stagflation
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periods during which prices rise at the same time that there is a slowdown in business activity
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Aggregate demand
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the sum of all the demand in the economy
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Aggregate supply
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the sum of all the supply in the economy
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Leading indicators
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measures of economic performance that usually change before real GDP changes
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Coincident
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measures of economic performance that usually change at the same time as real GDP changes
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Lagging indicators
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measures of economic performance that usually change after real GDP changes
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Inflation
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general increase in the price level of goods and services/ rise in the price level
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Disinflation
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slowing of the inflation rate
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Deflation
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decrease in the price level
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Hyperinflation
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rapid, uncontrolled inflation
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Frictional unemployment
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temporary unemployment while looking for a suitable job
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Structural unemployment
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results from technological or other changes in the job itself (the way things are done)
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Cyclical unemployment
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caused by changes in the business cycle (recessions)
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Seasonal unemployment
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workers voluntarily only work part of the year
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