• Definition: The study of how households and firms make decisions and how they interact in markets.
  • What It Means:


  • Definition: The study of economy-wide phenomena, including inflation, unemployment, and economic growth.
  • 'W'hat It Means:

Gross Domestic Product (GDP)

  • Definition: The market value of all final goods and services produced within a country in a given period of time.
  • What It Means:


  • Definition: Spending by households on goods and services, with the exception of purchases of new housing.
  • What It Means:


  • Definition: Spending on capital equipment, inventories, and structures, including household purchases of new housing.
  • What It Means:

Government Purchases

  • Definition: Spending on goods and services by local, state, and federal governments.
  • What It Means:

Net Exports

  • Definition: Spending on domestically produced goods by foreigners (exports) minus spending on foreign goods by domestic residents (imports).
  • What It Means:

Nominal GDP

  • Definition: The production of goods and services valued at current prices.
  • What It Means:

Real GDP

  • Definition: The production of goods and services valued at constant prices.
  • What It Means:

GDP Deflator

  • Definition: A measure of the price level calculated as the ratio of nominal GDP to real GDP times 100.
  • What It Means:

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