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National Income and Product Accounts (National Accounts)
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keep track of the flows of money between different sectors of the economy
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Household
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a person or group of people who share income
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Firm
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an organization that produces goods and services for sale
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Product Markets
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where goods and services are bought and sold
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Factor Markets
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where resources, especially capital and labor, are bought and sold
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Consumer Spending
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household spending on goods and services
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Stock
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a share in the ownership of a company held by a shareholder
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Bond
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a loan in the form of an IOU that pays interest
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Government Transfers
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payments that the government makes to individuals without expecting a good or service in return
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Disposable Income
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equal to income plus government transfers minus taxes, is the total amount of household income available to spend on consumption and to save
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Private Savings
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equal to disposable income minus consumer spending, is disposable income that is not spent on consumption
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Financial Markets
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the banking, stock and bond markets which channel private savings and foreign lending into investment spending, government borrowing, and foreign borrowing
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Government Borrowing
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the amount of funds borrowed by the government in the financial markets
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Government Purchases of Goods and Services
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total expenditures on goods and services by federal, state, and local governments
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Exports
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goods and services sold to other countries
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Imports
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goods and services purchased from other countries
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Inventories
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stocks of goods and raw materials held to facilitate business operations
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Investment Spending
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spending on new productive physical capital, such as machinery and structures, and on changes in inventories
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Final Goods and Services
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goods and services sold to the final, or end, user
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Intermediate Goods and Services
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goods and services bought from one firm by another firm to be used as inputs into the production of final goods and services
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Gross Domestic Product (GDP)
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the total value of all final goods and services produced in the economy during a given year
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Aggregate Spending
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the total spending on domestically produced goods and services in the economy—the sum of consumer spending (C), investment (I), Government purchases of goods and services (G), and exports minus imports (Xn ⇒ X-M)
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Value Added
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the value of a producer's sales minus the value of its purchases and inputs
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Net Exports
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the difference between the value of exports and the value of imports (Xn ⇒ X-M)
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aggregate output
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the economy's total production of final goods and services for a given time period, usually a year. Real GDP is the numerical measure of aggregate output typically used by economists. (pp. 12, 113)
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real GDP
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the total value of all final goods and services produced in the economy during a given year, calculated using the prices of a selected base year. (p. 114)
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nominal GDP
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the value of all final goods and services produced in the economy during a given year, calculated using the prices current in the year in which the output is produced. (p. 114)
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chain-linking
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the method of calculating changes in real GDP using the average between the growth rate calculated using an early base year and the growth rate calculated using a late base year. (p. 115)
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GDP per capita
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GDP divided by the size of the population; equivalent to the average GDP per person. (p. 115)
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