Econ Chapter 12 Notes Flashcards

1
Q

What is GDP? What does it help determine? What does a rising GDP mean for the economy?

A
  • The dollar value of all goods and services produced in the US for a given year
  • GDP helps determine the health of the economy
  • Rising GDP = healthy economy
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2
Q

What are the four Economic Sectors?

A

Household, Investment, Government, and Foreign

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3
Q

What does the Household Sector consist of?

A

Individuals and families
- Responsible for 75% of spending in our economy

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4
Q

What does the Investment Sector consist of?

A

All businesses

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5
Q

What does the Government Sector consist of?

A

federal, state, local (Ex: cities)

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6
Q

What does the Foreign Sector consist of?

A

consumers and producers in other nations

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7
Q

What are the Two Ways of Calculating GDP?

A

Expenditure Approach
Income Approach

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8
Q

What is the Expenditure Approach?

A

Consumer Goods + Producer Goods + Government Goods + Net Exports = GDP ($)

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9
Q

What is the Income Approach?

A

Wages + Interest + Rents + Profits = GDP ($)

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10
Q

What are the Four Types of Exclusions?

A

Intermediate Products
Secondhand Sales
Nonmarket Transactions
Underground Economy

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11
Q

What are Intermediate Products?

A

Goods used to produce other goods or services

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12
Q

What are Secondhand Sales?

A

Sales of used goods (not from a store)

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13
Q

What are Nonmarket Transactions?

A

services that are not paid for

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14
Q

What is the Underground Economy?

A

activities not reported for legal or tax reasons

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15
Q

What is Current GDP?

A

GDP that includes inflation

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16
Q

What is Real GDP

A

GDP where inflation has been removed

17
Q

What are the characteristics of GDP Per Capita?

A
  • Adjusting GDP for populations
  • Crude measure on how well a society is doing
18
Q

What are the Limitations of GDP? (3)

A
  • Does not tell how output occurs
  • Does not tell impact on quality of life
  • GDP can hide distortions
19
Q

What is GDP?

A

total dollar value of all goods and services produced in the U.S. in a year, even if the owners live somewhere else
Ex: Japanese auto plants in Ohio still count for U.S. GDP

20
Q

What is GNP?

A

total dollar value of all goods and services produced anywhere in the world by labor and properly owned by US residents in one year
Ex: U.S. owned factories in China or Guatemala count for U.S. GNP