Significant Terms
Borrowing money in order to spend it.
What is deficit spending?
This measures a country's economic output per person and is calculated by dividing the GDP of a country by its population.
What is per capita GDP?
Goods and services produced domestically but purchased and used abroad.
What are exports?
A short‐run fluctuation in economic activity.
What is a business cycle?
A cohesive way of thinking about a subject.
What is school of thought?
A school of thought that emphasizes government intervention to limit the ups and downs of the market by focusing on the demand side of the economy.
What is Keynesian economics?
The market value of all final goods and services produced within a country during a specific period.
What is gross domestic product?
Refers to money spent by the public sector on the acquisition of goods and provision of services such as education, healthcare, social protection, and defense.
What is government spending?
A short‐term economic downturn.
What is a recession?
The growth in the overall level of prices in an economy.
What is inflation?
A school of thought that emphasizes the importance of markets, limited government, and the supply side of the economy.
What is classical economics?
This measures a country's gross domestic product using current prices, without adjusting for inflation.
What is nominal GDP?
Goods and services produced abroad but purchased and used domestically.
What are imports?
A phase of the business cycle during which economic activity is increasing.
What is economic expansion?
A final product ready for sale that is used by the consumer to satisfy current wants or needs.
What are final goods?
Refers to the economic downturn from 2007 to 2009 after the bursting of the U.S. housing bubble and the global financial crisis.
What is the Great Recession?
An index of the average prices of goods and services throughout the economy.
What is price level?
Private spending on the tools, plant, and equipment used to produce future output.
What is investment?
A phase of the business cycle during which economic activity is decreasing.
What is economic contraction?
Outputs that provide benefits without producing a tangible product.
What are services?
GDP adjusted for the changes in prices.
What is real GDP?
The purchase of final goods and services by households, excluding new housing.
What is consumption?
The value of its total exports minus the value of its total imports. The figure also is called the balance of trade.
What are net exports?
The percentage change in real per capita GDP.
What is economic growth?
A product used to produce a finished product—also referred to as a consumer good.
What are intermediate goods?