| adjusted GNP | Series that tries to correct for the inclusion of welfare-reducing "goods" in GNP and for its inability to capture quality improvements; a measure of welfare.
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| chained-weighted index | This index is used to help correct for the fact that when
prices do not grow proportionately, consumers shift their purchases away from the relatively more expensive goods toward less expensive ones.
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| consumer price index (CPI) | Fixed-weight price index that measures the cost of the
goods purchased by the typical urban family.
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| core inflation | Measures change in prices of all goods and services except for food and energy.
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| deflation | Rate at which the price level falls, in percentage terms; opposite of inflation .
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| depreciation | Decrease in the value of the domestic currency relative to the currencies of other countries; used when exchange rates are flexible.
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| durable goods | Goods that yield services over a period of time. See consumer durables.
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| exchange rate | Price of foreign currency per unit of domestic currency.
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| factor payments | Payments made to factors of production; wages paid to labor are an example.
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| factors of production | Inputs to production; capital, labor, and natural resources
are examples.
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| GDP deflator | Measure of the price level obtained by dividing nominal GDP by real GDP.
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| government budget deficit | Excess of government expenditure over government
revenue.
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| government expenditure | Total government spending; includes both government
purchases and transfers.
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| government purchases | Government spending on goods and services. Contrast
government expenditure .
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| gross domestic product (GDP) | Measure of all final goods and services produced within the country. Real GDP measured in constant dollars. Nominal GDP measured in current dollars.
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| gross investment | Total investment; flow into the capital stock.
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| gross national product (GNP) | Measure of the value of all final goods and services
produced by domestically owned factors of production.
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| gross private domestic investment | The total amount of investment spending by businesses and firms located within a country.
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| human capital | Education and training of individuals to increase productivity.
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| inflation | Percentage rate of increase in the general price level.
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| intermediate goods | Goods used to produce other goods or services; flour purchased by bakers is an example.
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| investment | Purchase of new capital, principally by the business sector.
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| national income | Total payments to factors of production; net national product minus indirect taxes.
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| national income accounting identity | Y ≡ C + I + G +NX.
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| net domestic product (NDP) | GDP minus allowance for depreciation of capital.
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| net exports | Exports minus imports.
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| net investment | Gross investment less depreciation; measures the increase in the capital stock each period.
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| nominal GDP | Value of all final goods and services produced in the economy; not adjusted for inflation.
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| nominal interest rate | Expresses the payment in current dollars on a loan or other
investment (over and above principal repayment) in terms of an annual percentage.
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| personal consumption expenditure (PCE) | Measures inflation in consumer purchases based on the consumption sector of the national income accounts.
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| producer price index (PPI) | Price index based on a market basket of goods used in
production. The PPI replaced the wholesale price index (WPI).
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| production function | Technological relation showing how much output can be produced for a given combination of inputs.
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| real GDP | A measure of output; adjusts the value of final goods and services to reflect changes in the price level.
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| real interest rate | Return on an investment measured in dollars of constant value; roughly equal to the difference between the nominal interest rate and the rate of inflation.
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| saving | Money that is not spent.
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| transfer payments | Money given by the government to individuals, not in exchange for
goods or services; welfare payments are an example. See also entitlement programs.
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| unemployment rate | The fraction of the labor force that is out of work and looking for a job or expecting a recall from a layoff.
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| value added | Increase in value of output at a given stage of production. Equivalently, value of output minus cost of inputs.
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