Flashcards in chapter 9 Deck (30):
1
how much value is created in a year=
how much income is earned in a year
2
True False: wealth and income are the same thing
F income reflects value creation, wealth is a stock of what you own
3
True False: we measure income as the social gain from production
F we measure how much is paid for output that is produced
4
GDP is
market value of all goods and services produced within country's borders in one year
5
what is a final good
one that is sold to a final consumer
6
True False: sales of used goods are not counted in GDP
T since they have already been counted once this would cause double counting
7
True False: value of a newly issued share of stock is counted in GDP
F the money that comes from the stock sale will purchase capital and to count both transactions would be double counting
8
2 approaches to calculating GDP
income approach, expenditure approach
9
government uses _ to calculate GDP
income approach, because tax records give information about income and because they gather this data as people pay taxes
10
four components of the expenditure approach
consumption, government purchases, investment, net exports
11
what is the definition of investment with regards to the expenditure approach to GDP?
spending by businesses on capital, changes in business inventories, and spending on new residential housing
12
real GDP is
it is what GDP would be if prices were the same as they had been in the base year
13
economic growth is
the percentage change in real GDP over a years time
14
strong growth rate is
3.5%
15
if we are at the peak of economic activity _ is coming in the future
contracting
16
1982 recession compared to recent recession
both just as bad but 1982 recovery was much stronger
17
per capita GDP is
GDP/population= how well off people in the economy are
18
US GDP compared to canada GDP
US is 20% bigger
19
US in terms of economic freedom
not highest ranking and continues to fall
20
most recent quarterly US economic growth
1/10 of 1%
21
US GDP in the most recent quarter
15.9 trillion
22
intermediate goods—
those
not sold to a final user.
23
transfer payments—
taking from one person and giving to another,but not in return for any good or service
24
bads—
unwanted phenomena such as disease, crime, and garbage.
25
Consumption—
spending by consumers on nondurable goods, durable goods, and services. Durable
goods are those which last for at least a year
26
Investment—
spending by business on capital (plant, equipment, tools, etc.), changes in business
inventories, and spending on new residential housing. Note, this does not mention stocks or bonds.
27
Government Purchases—
spending by all levels of government on goods and services. Note that
transfer payments do not fit this definition
28
Net Exports =
Net Exports = Exports - Imports. Note that this makes it seem as if “Exports, good. Imports bad,”
which is contrary to what we learned in the trade chapter. However, both imports and exports are
done by those who are making the economy better off
29
recession
Two successive quarters (three month periods) of negative economic growth
30