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Macro > Topic 1 > Flashcards

Topic 1 Flashcards

1
Q

3 approaches to economy’s output

A

Product
Income
Expenditure

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2
Q

What are the national income accounts

A

Accounting framework to measure current economic activity

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3
Q

GDP define

A

The total value of all final goods and services which are produced for the market place during a given time period and within the nations boarders

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4
Q

Intermediate good and example

A

Goods used up in the process of producing something else
EG - flour used to make bread

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5
Q

Final good

A

A product sold to its final user. End products of a process

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6
Q

What is product approach

A

Measure economic activity by adding up the market values of goods and services produced, excluding any goods or services used in intermediate stage of production

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7
Q

What is value added

A

The market value of output minus the value of inputs purchased from other producers

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8
Q

Income approach

A

Add all forms of income then minus expenses Like wages rent and interest

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9
Q

Aggregate income =

A

Total wages + total profit + (taxes)

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10
Q

Consumption =

A

Spending by households on final goods and services

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11
Q

Government purchases -

A

goods and services bought by government

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12
Q

Net exports

A

Goods and services bought by residents of foreign countries

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13
Q

Planned business fixed investment

A

Purchases of capital goods by businesses

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14
Q

Residential investment

A

Purchases of new homes by households

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15
Q

What does consumption expense include

A

Imports
Rent
Also how much each house could be rented for if they weren’t owned

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16
Q

What does consumption expense not include

A

Homes, land, used goods,and financial assets

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17
Q

What is inventory investment

A

The amount in which inventories increase in a year

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18
Q

Can private investment be for imports too

A

Yes

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19
Q

What does investment =

A

Unplanned investment plus planned investment

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20
Q

Capital good

A

Long lasting tool used in production

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21
Q

Capital stock

A

Total value of all capital goods in economy

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22
Q

Private investment is the rate of change…

A

Of the stock of capital

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23
Q

Capital formation

A

Increase in nations capital stock during a given time period

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24
Q

What does private investment not include

A

Government investment
Consumer durable like furniture home phones
Human capital

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25
Q

What does private investment ignore

A

Depriciation

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26
Q

Net private investment=

A

Gross private investment - depreciation

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27
Q

Two government puchsases components

A

Government investment
Government consumption

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28
Q

Government investment

A

Capital goods purchased by the governement

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29
Q

Government consumption

A

Spending on goods and services used up in time period like salaries or materials

30
Q

Government expenditure

A

Purchases of goods and services plus money disbursed by gov for transfer payments

31
Q

What is transfer payment

A

Any payment that is not a compensation for goods services or resources

32
Q

Net exports =

A

Exports - imports

33
Q

GDP = for expenditure approach

A

C + I + G + X - IM

C = household purchases
I = business purchases
G = government purchases
X= exports
IM= imports

34
Q

What are unsold goods

A

Unplanned investment

35
Q

What do all approaches have in common

A

Production = income = expenditure approach

36
Q

Stock variable

A

Variable representing a quantity at a moment in time

37
Q

FLow variable

A

A variable representing a process that takes place over a period

38
Q

Examples of stocks

A

Wealth capital

39
Q

Examples of flows

A

GDP, income, expenditure, saving, investment

40
Q

Rate of change of a stock is a ….

A

Flow

41
Q

GNP=

A

Total value of goods and services produced for the market place by domestic factors of production during a given time period

42
Q

Domestic factors of production

A

Capital and labour owned by domestic nationals

43
Q

NFP= ( net factor payments form abroad)

A

Income paid to domestic factors of production by the rest of the world minus the income paid to foreign factors by home economy

44
Q

GNP= equation

A

GDP+NFP

45
Q

Net national product (NNP)

A

Gross national prioduct minus depreciation of capital

46
Q

NNP= equation

A

GNP- depreciation

47
Q

Private disposable income

A

Income the pro at sector has available to spend

48
Q

Private disposable income equation =

A

Y+NFP+TR+INT-T
Y= GDP
TR+ transfer payments received from gov
INT = intrest payments on gov debt
T = taxes

49
Q

Net government income

A

Part of gdp that is not at disposal of private sector

50
Q

Net government income =

A

T - TR -INT

51
Q

Wealth

A

Value of everything an individual owns minus liabilities

52
Q

National wealth

A

Total weal;th of an economy

53
Q

Saving

A

Abstenation from current consumption

54
Q

Saving =

A

Y + NFP - C - G

55
Q

Saving = in closed economy

A

S= Y - C - G

56
Q

What’s saving rat e

A

Aggregate saving / GDP

57
Q

Private saving =

A

Private disposable income - consumption

58
Q

Government saving =

A

Government disposable income - government consumption

59
Q

Sum of private and government saving =

A

S= Y + NFP - C - G

60
Q

Current account balance

A

Payments received from abroad for currently produced goods and services minus the payments made to foreigners by domestic economy

61
Q

What is net income payments equal to

A

NFP

62
Q

Net unilateral transfers

A

Payments form one country to another that don’t correspond to purchase of good or service or asset

63
Q

Example of net unilateral transfer

A

Foreign aid

64
Q

Current account =

A

Net exports + NFP

65
Q

Saving private =

A

Private investment - gov saving + current account

66
Q

Current account positive =

A

Incoming payments greater than outgoing

67
Q

What does national wealth consist of

A

Domestic physical assets

Net foreign assets

68
Q

What can national wealth change as a result of

A

Changes in values of foreign assets or liabilities

National saving

69
Q

What’s national savings 2 uses

A

Increase stock of domestic physical capital through investment

To increase stock of net foreign assets

70
Q

What is the buyer of a bond

Borrower or lender

A

Lender

71
Q

What is the seller of a foreign bond

Borrower or lender

A

Borrower

Macro (5 decks)

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