Economics Flashcards
(21 cards)
How do you calculate GDP using the income approach?
TNI + Sales Tax + depreciation + NFFI
TNI = Total National Income NFFI = Net foreign Factor Income
How do you calculate GDP using the expenditure method?
GDP = C + G + I + NX C = consumer spending G = govt expenditures I = sum of country’s investments NX = net exports
What are the components for calculating TNI?
Sum of all wages, rent, interest and profits
What is Net foreign factor income?
The difference between the total income that a country’s citizens and companies generate in foreign countries, versus the total income foreign citizens and companies generate in the domestic country.
What is Nominal GDP?
the total value of all goods and services produced at current market prices. This includes all the changes in market prices during the current year due to inflation or deflation
What is Real GDP?
the sum of all goods and services produced at constant prices. The prices used in determining the Gross Domestic Product are based on a certain base year or the previous year. This provides a more accurate account of economic growth, as it is already an inflation-adjusted measurement, meaning the effects of inflation are taken out
Personal Disposable income = ?
personal income - personal taxes
Given projected growth in labor force and projected growth in labor productivity, how do you find projected growth in GDP?
Proj growth in labor Force + Proj growth in Labor Productivity = proj growth in GDP
What market has these characteristics: many sellers, differentiated product, low barriers to entry, and some pricing power
A Monopolistically Competitive Market
What do Keynesian economists believe in?
Active government intervention to bring the economy back to its potential output
describe new classical macroeconomics
Robert Lucas argue that macroeconomic models should study agents with a utility function and a budget constraint (much like microeconomics); individuals in the model maximize their utilities and firms maximize their profits
The decrease in the aggregate supply of goods and services stemming from an increase in the cost of production
Cost-Push Inflation
The increase in aggregate demand, categorized by the four sections of the macroeconomy: households, business, governments, and foreign buyers
Demand-pull inflation
an expanding economy, increased government spending, or overseas growth can cause what type of inflation?
Demand-Pull inflation
an increase in the costs of raw materials or labor can contribute to what type of inflation?
cost-push inflation
How is the Fisher Index calculated to measure inflation?
The square root of the multipcation of Laspeyres
index and the Paasche index
How do you calculate the Paasche index for inflation?
Total sum of current year prices times current year quantity divided by the total sum of current year prices times base year quantities
How do you calculate the Laspeyres Price Index?
(Total sum of current year prices times base year quantity) divided by (total sum of base year prices times base year quantities)
Aggregate Demand Multiplier
= 1 over (1-consumption rate multiplied by 1-tax rate)
Where in a chart does a monopolist maximize profit?
The monopolist produces quantity Q(1) where MR = MC. It then sets a price P > MC
The Profit maximizing rule of oligopolies is best described as:
The level of output where MR=MC
