capital income   the sum of profits, rental payments, and interest payments.
consumer price index (CPI)  a price index equal to the current price of a fixed market basket of consumer goods and services relative to a base year.
consumption  purchases of final goods and services by individuals.
depreciation  the decrease in an asset’s value over time; for capital, it is the amount by which physical capital wears out over a given period of time.
exports  the total value of the goods and services that people in one country sell to people in other countries.
final good  a new good that undergoes no further processing before it is sold to consumers.
GDP deflator  nominal GDP divided by real GDP; it measures the level of prices of goods and services included in real GDP relative to a given base year.
government purchases  purchases by federal, state, and local governments of new goods and services.
imports  the total value of the goods and services that people in one country buy from people in other countries.
intermediate good  a good that undergoes further processing before it is sold to consumers.
investment  purchases of final goods by firms plus purchases of newly produced residences by households.
labor income  the sum of wages, salaries, and fringe benefits paid to workers.
national saving  aggregate income minus consumption minus government purchases.
net exports  the value of exports minus the value of imports.
nominal GDP  gross domestic product without any correction for inflation; the same as GDP; the value of all goods and services newly produced in a country during some period of time, usually a year.
price level  the average level of prices in the economy.
real gross domestic product (real GDP)  a measure of the value of all the goods and services newly produced in a country during some period of time, adjusted for inflation.
trade balance  the value of exports minus the value of imports.
value added  the value of the firm’s production minus the value of the intermediate goods used in production.