4.10 Key Terms
Key Terms
A year selected to set prices for real GDP calculations. When calculating real GDP, prices are kept constant at their base year levels.
A variable that is measured over a specific period of time. For example, income is a flow variable.
A variable that is independent of time. For example, the balance in a checking account is a stock variable.
Goods used in the production of Final Goods (for example, the logs and lumber used to build a house). The value of intermediate goods is not counted towards GDP, since their value is included in the value of the final goods they are used to produce.
Goods whose value is counted towards the GDP. These are finished products, as distinguished from Intermediate Goods, which are used to produce Final Goods.
the value of all final goods and services produced within a country in a given year
The amount by which the value of a firm’s output exceeds the value of the goods and services the firm purchases from other firms
The total value of final goods and services produced during a particular period with factors of production owned by the residents of a particular country
The GDP deflator is obtained by dividing the nominal GDP by the real GDP and multiplying the result by 100. The goal of the deflator is to keep track of price levels from one year to the next.
The value of the goods and services produced in the stated year
The value of the goods and services produced in the stated year, with prices set to their values in a given base year
Typically, a business cycle has two phases: expansion and recession and two turning points: peak and trough.
