Chapter 20 Flashcards
1
Q
Why do we care
A
Quality of life. Compare/ measure across countries and time. (Put a number on your quality of life)
2
Q
4 parts of GDP
A
Market value
Final goods and services
Within a country
Given period of time
3
Q
How do we count
A
Expenditure
Income
4
Q
4 parts of expenditure
A
Consumer
Firms
Government
Rest of world (import. Export)
5
Q
4 factors of production
A
Labour-wages
Capital-interest
Land-rent
Entrepreneurship-profit
6
Q
GDP=
A
Y (wages + interest + rent + profit)=C+I+G+(X-M)
7
Q
Nominal GDP?
A
Reflects price changes as well as quantity changes over time
8
Q
Steps for chained GDP
A
Chose one base year Calculate real GDP in each year using that base year Calculate growth rate Chose other base year repeat 2,3 Average of two growth rates Build chain
9
Q
Limitations to real GDP
A
Leisure time Natural resource use Population growth (per capita) Household production Rule of laws Illegal goods
