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Economics > GDP > Flashcards

GDP Flashcards

1
Q

What is macroeconomics

A

the study of the economy as a whole

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2
Q

what does fiscal refer to

A

the government taxes and spending

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3
Q

what is a stock value

A

a measure that captures a quantity at a given time eg amount of moeny in a current account

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4
Q

what is a flow value

A

a measure that captures quantity over a period of time eg monthly paycheck

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5
Q

what are the two things that GDP represents

A

countries total income and total expenditure, these are the same

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6
Q

why is total income and total expenditure the same

A

beacuse every earning of someone is spending of another

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7
Q

Define GDP

A

market value of all final gooods and services produced within a given country in a given period of time

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8
Q

what does GDP stand for

A

gross domestic product

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9
Q

what is the difference between GDP and GNP

A

GDP is what is produced within the physical borders of the country, GNP is what is produced by a countries nationals

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10
Q

what does market value mean

A

what people pay for it

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11
Q

what does a final good mean

A

not intermediate goods eg IPhones not screens, buttons

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12
Q

why does it only count final good

A

to avoid double counting

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13
Q

does GDP count resale of goods? eg buying a second hand car

A

no only new selling goods

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14
Q

if an intermediate good isn’t made into a final good by the end of the year when GDP is calculated, is it counted

A

yes and taken away from price of final good next year

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15
Q

is Irelands GDP or GNP bigger? why?

A

GDP as ireland has many MNCs opertaing here

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16
Q

define GNP

A

the value of all income earned by a given nation’s residents over a period of time, regardless of where it is earned

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17
Q

what are the four components of GDP

A

Consumption
Investment
Government spending
Net Exports

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18
Q

what does consumption include

A

any spending on final goods by households

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19
Q

what does investment include

A

firm spending on capital and equipment

newly built houses

20
Q

what does government spending include

A

sum of all goods and services purchased by the government eg hospitals, vaccines, education

21
Q

what does government spending not include when counting GDP

A

Transfer payments including social welfare payments (purchases which arent made in order to get tangible goods in return)

22
Q

how to calculate net exports

A

all exports - all imports

23
Q

what additional component is needed to calculate GNP

A

net factor income from abroad

24
Q

what is the difference between real and nominal GDP

A

real gdp is measured using a fixed base price from some year

nominal gdp is measured using the current value of the goods

25
Q

which grows faster generally Nominal GDP orreal GDP

A

nominal

26
Q

what does the GDP deflator measure

A

how much prices are changing

27
Q

how to calculate the GDP deflator

A

nominal GDP/ Real GDP

28
Q

What does GNI stan dfor

A

gross national income

29
Q

what is GNI equal to

A

GNP

30
Q

Some limits related to GDP

A

Accounting for illegal activities?

value of leisure time and those who unpiad work at home?

value of public goods

potential raise in GDP after wars/disasters eg new buildings after earthquake will show a growth

some bad things are produced eg pollution

says nothing about distribution of wealth

is money == happiness

31
Q

alternatives to measuring wellbeing rather than GDP

A

human development index
happy planet index

(life expectancy, % in 3rd lvl edu, equality, sanitation facilities, nutrition, employment)

32
Q

benefits of GDP

A

Easy to compute
reliable
everyone has dofferetn benchmarks for happiness

33
Q

Is nominal or real GDP better at showing growing ecoomies

A

real, not affected by inflation

34
Q

if a jump in prices was due to tech development, is real or nominal gdp a better measure of growth

A

nominal

its not inflation but a perm price change

35
Q

what is rule of 70

A

if some varibale grows at x% per year, then that variable doubles in approx 70/x years

36
Q

why do governments invest in education to encourage growth

A

investment in human capital is likely to lead to developments in technology which in turn increase efficiency and productivity

37
Q

what is gross investment

A

the total spending on capital stock per period in a country

38
Q

what is net investment

A

spending on capital stock taking into account spending on deprication of the existing capital stock

39
Q

define productivity

A

quantity of goods and services that a worker can produce in a specific period

40
Q

what is human capital

A

knowledge and skills

41
Q

what is technological knowledge

A

societies understanding on how the world works and the best wya to produce goods and services(quality of human and physical capital)

42
Q

do natural resources limit our possible growth?

A

will the fixed supply of limited natural resources eventyually run out?

technology imporvements have allowed less natural resourcesto be used eg cars now use way less petrol than before

scarcity is reflected in market prices and rn, prices of natural resources arent extremelt high meaning they are not scarce

43
Q

why do governments want to encourage investment by firms

A

the correlations between investment and growth is strong meaning the standard of living in the country can improve

44
Q

what is the catch up effect

A

when the economy has a low level of capital an extra unit of capital leads to a large increase in output eg changing from traditional farming methods to machinary. This is so these low capital countries can catch up to the high capital countries

in the countries with high level of output already, each new until of capital will result in a small increase in output

45
Q

Explain why an economy’s income must equal its

expenditure.

A

every spending of one person in an economy is the earnings of another and vice versa

46
Q

Many years ago, Jamanda paid €500 to put together
a record collection. Today she sold her albums at
a car boot sale for €100. How does this sale affect
current GDP?

A

it wont because GDP only accounts for the sale of new goods

Economics (25 decks)

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