AP®︎ Macroeconomics: Topic 2.1 Flashcards

A model showing how money, resources, goods, and services move between households and firms.

Product market: goods and services are sold; factor market: resources like labor, land, and capital are sold.

Households supply resources and buy output; firms demand resources and produce and sell output.

The dollar value of all final goods and services produced within a country's borders in one year.

Products bought for end use rather than for resale or further production.

Products used to make other goods and excluded from GDP to avoid double counting.

Expenditures approach sums spending, income approach sums income, value-added approach sums each stage's added value.

A method that adds consumption, investment, government purchases, and net exports to find total output.

Household spending on final goods and services, except new housing.

Business spending on capital goods, inventories, and new residential construction.

Government purchases of final goods and services, excluding transfer payments.

Exports minus imports, showing the value of domestically produced goods sold abroad minus foreign goods bought domestically.

A method that adds wages, rent, interest, and profit earned from current production.

A method that adds the increase in value created at each production stage.

Mistakenly counting the same output more than once, usually by including intermediate and final goods together.

Government payments without current production in return, so they are excluded from GDP.

Nonmarket labor like volunteering or caregiving that is excluded because no market transaction occurs.

Underground market transactions excluded because they are not officially recorded in national accounts.

The wear and tear on capital goods over time, which is not counted as new output.

The value of current final output found using current-year prices and quantities.