Ch. 5 - Measuring Nation's Income Flashcards Preview

Economics > Ch. 5 - Measuring Nation's Income > Flashcards

Flashcards in Ch. 5 - Measuring Nation's Income Deck (30):
1

Macroeconomics is....

study of economy as a whole; economy wide phenomena; income vs. expenditure

2

GDP is...

Gross Domestic Product; total income of everyone in the economy; income = expenditure b/c for every dollar spent is a dollar of income for the seller
-market value of all final goods and services produced w/i a country in a given period of time.

3

Circular Flow Diagram shows the GDP as

spending, revenue, factor payments, and income

4

Factor Payments are...

to the Factors of Production (labour land capital)

5

Factors of Production are... (3)

labour, land, capital

6

final goods are.... are not....

intended for the end user ... not components in the production of other goods.

7

GDP includes tangible goods (eg?) and intangible services (eg?)

1. DVDs, beer, etc
2. cell service, concerts, cleaning, etc

8

T/F. Goods produced in the past are included in the current GDP.

False

9

How often is GDP calculated? (usually 2 times)

Per year or per quarter (3 months)

10

4 components of GDP are...

Consumption (c); investment (I); gov't purchases (G); net exports (nx)

11

GDP formula is...

y = c + i + g + nx

12

Consumption is...

total spending by households on G+S
(renters = rent; homeowners = input (rental value))

13

Investment is...

total spending on goods to prod more goods in the future
-eg. equipment (tools), structures (factories), inventories (prod. but not sold)

14

T/F investment includes purchase of stocks or bonds

false

15

Gov't Purchases is...

spending by all levels of gov't (salaries, public works, etc)

16

T/F. Gov't purchases excludes CPP and elderly/employment/insurance benefits.

True

17

Net Exports is.... (formula)

exports - imports

18

exports are....

foreign spending on G+S here

19

imports are....

portions of G, C, I spent on G+S abroad

20

Which is corrected for inflation? Real or Nominal GDP?

real

21

Nominal GDP is...

values output using current Price
-change reflects both P + Q

22

Real GDP is...

output using P of a base year
-change only reflects Q (b/c essentially P is constant)

23

GDP Deflator is...

measure of the overall level of Prices

24

GDP Deflator formula is...

= 100 x (nominal GDP/real GDP)

25

How do you measure an economy's inflation rate?

compute the % increase in GDP from year to year

26

GDP + the economic well being is a perfect measure?

No.

27

GDP is the main indicator of

average person's standard of living

28

What doesn't GDP measure that affects ppl's well-being? (4)

1. environment quality
2. leisure time
3. parental care (non market activity)
4. equitable income distribution

29

How does a high GDP help w/ living standards?

Brings in more money for gov't to spend on schools, environment etc.

30

T/f. Life expectancy and literacy have -'ve correlations w/ GDP

False. Both positively correlate.