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AP Economics > GDP TEST > Flashcards

GDP TEST Flashcards

1
Q

What is an intermediate good?

A

A good that is used in production

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2
Q

What things aren’t counted for GDP?

A

Transfer payments, second hand sales, and security transactions

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3
Q

What are public transfer payments?

A

Social security, welfare, and veteran’s benefit

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4
Q

What are private transfer payments?

A

Gifts or inheritances

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5
Q

What are secondhand sales?

A

The resale of good already counted when new

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6
Q

What are security transactions?

A

Stocks and bonds

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7
Q

What is the definition of GDP?

A

Market value of the total good and services produced within the boundaries of the US

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8
Q

Why do we measure GDP?

A

To create public policy using predictions about the economy, GDP helps us determine where we are in the business cycle

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9
Q

What is the GDP formula?

A

Consumption+gov. Spending+gross domestic investment+net foreign investment

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10
Q

How do you calculate net foreign investment?

A

Exports minus imports

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11
Q

What is net investment?

A

Gross- depreciation

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12
Q

What is another term for depreciation?

A

Consumption of fixed capital

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13
Q

How do you calculate NDP?

A

GDP minus depreciation

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14
Q

What is disposable income?

A

Personal income minus taxes

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15
Q

What are the 3 things that companies can do with corporate profits?

A

Pay income taxes, distribute as dividends, or keep the money and reinvest

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16
Q

What is a dividend?

A

A return in an investment

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17
Q

What is value added tax?

A

The difference between what you payed and what you sold a product for

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18
Q

What is disposable income?

A

Income after taxes

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19
Q

What is the only thing transfer payments are included in?

A

Personal income

20
Q

What is nominal?

A

The current level or current value

21
Q

What is real?

A

The value adjusted for inflation

22
Q

What is the real GDP formula?

A

Base year times output

23
Q

What is real GDP used for?

A

The measure the standard of living

24
Q

How do you calculate nominal GDP?

A

Output times price

25
Q

How do you calculate price index?

A

Base year times price

26
Q

What is the order of the business cycle?

A

Peak, recession, depression, expansion

27
Q

What is another word for the peak period?

A

Prosperity

28
Q

What is another word for the recession period?

A

Contraction

29
Q

What is another word for the expansion period?

A

Recovery

30
Q

What is the rule of 70 for inflation?

A

70/the annual percent rate of inflation

It calculates the number of years it takes to double prices

31
Q

What is a final good?

A

A good that is sold for final use by the consumer

32
Q

What is GDP gap?

A

Below the line; the higher the unemployment rate the larger the the GDP gap

33
Q

What is negative GDP gap?

A

When the economy’s outputs exceeds its potential; this eventually causes inflation and can’t not be sustained

34
Q

What is another term for real GDP?

A

Real domestic output

35
Q

What is Okun’s law?

A

For every 1% the unemployment rate exceeds the natural rate, a 2% GDP gap occurs

36
Q

What is the lead indicator of a recession?

A

The sale of durable goods

37
Q

What causes demand pull inflation?

A

To much money is the economy wanting goods that aren’t there, economy seeks more production once it has already reached full unemployment

38
Q

What is phase 1 of demand pull?

A

The price stays the same while the economy is experiencing growth

39
Q

What happens during phase 2 of demand pull?

A

Prices go up and the economy is still growing the trade off for growth is moderate inflation

40
Q

What happens durin. The 3rd phase of demand pull?

A

The demand goes up but can’t produce anymore so prices continue to go up

41
Q

What is cost push inflation?

A

Supply side inflation; prices rise while output and employment are declining; oil is the only product that can cause this

42
Q

What would you rather recieve as a gift during hyperinflation?

A

Things of value rather than money or checks

43
Q

What happens during the peak of the business cycle?

A

GDP is up
Unemployment is down
Price levels go up

44
Q

What happens during recession of the business cycle?

A

GDP goes down
Unemployment goes up
Price levels stay the same

45
Q

What happens during depression?

A

GDP goes down
Unemployment goes up
And price levels go down

46
Q

What happens during expansion?

A

GDP goes up
Unemployment goes down
And price level go up

AP Economics (19 decks)

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