Econ - Chapter 10: Measuring a Nation's Income Flashcards
(17 cards)
1
Q
Gross Domestic Product (GDP)
A
Total market value of all final goods and services produced in a country in a given time period
2
Q
Aspects of GDP
A
- output is values at market price
- all items produced in the economy and legally sold
- only value of final goods and services
- includes tangible goods and services
- value of production w/in a country
- value of production that takes place during a specific time period
3
Q
What doesn’t get counted in GDP?
A
- items that never entered the marked
- items produced and sold illegally
4
Q
Who computes GDP?
A
Bureau of Economic Analysis
5
Q
2 ways to look at GDP
A
- total income from producing goods and services
- total expenditure on goods and services produced in economy
6
Q
What are the 3 main components of GDP
A
Households, Firms, and Government
7
Q
Consumotion
A
- Household Spending
- doesn’t include new housing
8
Q
Investment (I)
A
- Firm spending on capital equipment, structures, adn inventory
9
Q
Government Spending (G)
A
- spending by local, state, and federal gov’ts
- excludes transfer payments
10
Q
How to calculate GDP
A
GDP = C + I + G + NX
11
Q
Net Exports (NX)
A
Exports-Imports
12
Q
GDP/person
A
GDP/pop
13
Q
Nominal GDP
A
- values in production of goods and services at current price
- not corrected for inflation
14
Q
Real GDP
A
- values the production of goods and services at constant prices
- corrected for inflation
15
Q
GDP Deflator
A
Price index to deflate nominal GDP
GDPr = GDPn/GDPd *100
16
Q
What does a higher GDP indicate?
A
a higher standard of living
17
Q
What is not included in the GDP, but contributes to a higher standard of living?
A
- value of leisure
- value of a clean environment
- value of almost all activity that takes place outside of market (e.g. volunteer work, spending time with family)
