Economics Glossary: G -, Learning Economics... Solved!


Economics Glossary: G

Game theory – The tool that economists use to study strategic behavior.  This type of behavior recognizes the mutual independence of the players and takes this into account during its analysis.

GDP price index – An average of all of the current prices of goods and services included in the calculation of GDP and is expressed as a percentage of the base-year prices.

General agreement on tariffs and trade (GATT) – An international agreement signed by 23 countries in 1947 to promote foreign trade.

Goods and services – The objects (goods) and the actions (services) that people have value for and are produced to satisfy human wants.

Goods market – The market where goods and services are bought and sold, and where equilibrium aggregate output is determined.

Government consumption and gross investment (also Government spending or government expenditure (G)) – The expenditures by all levels of government on final goods and services.

Government spending (expenditure) multiplier – The ratio of the change in the equilibrium level of output compared to a change in government spending.  So if government spending is $1 billion, and output rises by $5 the ratio would be 5.

Graph – A two-dimensional presentation of a set of data.

Great Depression – The period of extreme economic contraction and very high unemployment that began in the late 1920’s and continued into the 1930’s.

Gross domestic product (GDP) – The total market value of all final goods and services produced within a certain period of time (usually one year) within a country.  Or, the total value of final goods and services produced within a country’s borders in a given time period.

Gross investment – The total value of all newly produced capital goods (for example, factories, tools, housing and inventory) produced within a certain period (usually one year).

Gross national income (GNI) – Gross national product (GNP) converted into dollars using an average of currency exchange rates over several years that is adjusted for the rates of inflation.

Gross national product (GNP) – The total market value of all final goods and services produced within a certain time period (usually one year) by the factors of production owned by a country’s citizens and is not dependent on the location of production.  This means that a Toyota (Japanese company) produced in the United States counts towards Japan’s GNP.

Gross private domestic investment (I) – The total investment in capital within a certain time period (usually one year).  This can take the form of new housing, factories, tools, or inventory.