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Chapter 20

ECON-1007EL Chapter Notes - Chapter 20: Gdp Deflator


Department
Economics / Science Èconomique
Course Code
ECON-1007EL
Professor
B. Eastman
Chapter
20

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Chapter 20: The Measurement of National Income
Definitions
Intermediate Goods
All outputs that are used as inputs by other producers in a further
stage of production
Final Goods
Goods that are not used as inputs by other firms but are to be sold for
consumption, investment, government, or export during the period
under consideration
Value Added
The value of a firm’s output minus the value of the inputs that it
purchases from other firms
Gross Domestic Product (GDP)
The total value of goods and services produced in the economy
during a given period
Consumption Expenditure (C)
Household expenditure on all goods and services.
Investment Expenditure (I)
Expenditure on the production of goods not for present consumption.
Inventories
Stocks of raw materials, goods in process, and finished goods held
by firms to mitigate the effect of short-term fluctuations in
productions or sales
Capital Stock
The aggregate quantity of capital goods
Fixed Investment
The creation of new plant and equipment
Gross Investment
The total investment that occurs in the economy
Depreciation
The amount by which the capital stock is depleted through the
production process
Government Purchases (G)
All government expenditure on currently produced goods and
services, exclusive of government transfer payments.
Transfer Payments
Payments to an individual or institution not made in exchange for a
good or service
Imports (IM)
The value of all domestically produced goods and services purchased
from firms, households, or governments in other countries
Exports (X)
The value of all goods and services sold to firms, households, and
governments in other countries
Net Exports (NX)
The value of total exports minus the value of total imports.
Gross National Product (GNP)
The value of total incomes earned by domestic residents
Disposable Personal Income
The part of national income that accrues to households and is
available to spend or save
GDP deflator
An index number derived by dividing nominal GDP by real GDP. Its
change measures the average change in price of all the items in the
GDP
Equations
Value Added
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