Are independent variables that come from outside the economic model.

exogenous variables

Means the changes in consumer savings due to changes in disposable income

marginal propensity to save

The income earned from consumer expenses, firm’s investments, and government spending.
National income

It does not include factor payments from abroad.

gross domestic product

Measures the country’s economic growth by dividing national income by the number of
population.
per capita gross national product

Is a branch of economics which deals with the aggregates in the economy.

macroeconomics

The changes in consumption brought about by changes in disposable income affects the value of
the multiplier.
marginal propensity to consumers.

Country’s GDP plus net factor income from abroad

Gross national Product

Specifically measures the economic activities of a country.

macroeconomics

It is the summation of all goods and services produced in a specific country within a specific
period of time.
gross domestic product

Occurs when the value of final goods measured have included the value of intermediate goods.
double counting

When a nation's economy privatizes it changes from

government ownership to private ownership

In a factor market,
businesses are customers and individuals are producers
In economic terms, laissez faire means that the government
stays out of the marketplace

In economic terms, property means

everything an individual owns and the labor s/he provides

The governments of some nations answer the question of what to produce to

control the economy

Absolute loyalty to the people in power is required by a(n)

authoritarian system

An advantage of a pure market economy is that it

allows communities to set their own economic development

In a market economy, the real power in the market place is held by the
consumer

A macroeconomist would be interested in

general rise in prices

Producers and consumers drive the economy of a

market economic system

Suppliers in a product market are

businesses

According to Karl Marx, all of history is a struggle between

classes

An example of real capital is

a warehouse

The situation where women tend crops and raise children while men hunt is often found in a
traditional economy

In today’s world, there are

no pure market economies

Using a PPC can help to increase a company's

efficiency

The way a society uses scarce resources to satisfy its people's unlimited wants is called an
economic
system

Elements of traditional, command, and market economies are combined in a

mixed economy

With voluntary exchange, a buyer and seller agree to business together

for the mutual benefit of both

A circular flow model shows how

all interactions occur in a market economy

It estimates the total expenditure of the economies output of goods and services.
Gross domestic product

Calculates the value of all final goods and services valued at constant market prices. It helps to
correct for inflation.
real GDP

It is a measure of the price level calculate as the ratio of nominal GDP to real GDP times 100.
GDP deflator

Is the percentage change in some measure of the price from one period to the next.
inflation rate

Two consecutive quarters of falling real GDP

recession

Total of the selling prices of all goods and services produced in country in one year
Dollar Value

Goods used in the production of final goods

Intermediate goods

Economics estimate annual expenditure on 4 categories of final goods and services, then add
total expenditures on all categories
Expenditure Approach

Goods that last a short period of time, such as food, light bulbs and sneakers
non durable goods

Calculates GDP by adding all incomes in economy

income approach
GDP measured in current prices - use current years prices to calculate value of current years
output but increase in process appears to make GDP rise
Nominal GDP

Doesn't measure what people make/ do themselves, does rise when people pay someone to do
these things
non market activities

Black market/informal transactions, adds nothing to GDP

Underground Economy

The loss of the value of capital equipment that results from normal wear and tear
Depreciation

How much money people actually have to spend after paying taxes; personal income minus
individual income taxes.
Disposable Income

The average of all the prices in the economy, determine aggregate supply
Price Level

the height of an economic expansion, when real GDP stops rising

Peak

Stock market, interest rates, manufacturers, new orders of capital goods

Indicators

Generate new/improved production, improve physical capital, better goods and services
Scientific Research

Spending on anything from infrastructure to national defense; does not include transfer
payments with no goods or services exchange, such as student aid
Government Spending

Includes all money payments (wages, profit interest, rent) earned by households as a result of
their interaction in the resource market. When added together, these factor payments should be
equivalent to GDP (with addition of depreciation and indirect business taxes). Transfer payments
from the government are not counted.
National Income

Monthly economic report that shows dollar amount in inventory held by retailers, manufacturers,
and wholesalers
Business Inventories