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Eco 202 > Exam 2: Ch. 4 > Flashcards

Exam 2: Ch. 4 Flashcards

(61 cards)

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1
Q

nominal anything vs real anything

A

nominal: what it says it is
real: what is actually is..realistically..comparatively

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2
Q

nominal GDP

A

dollar value to current output using current prices

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3
Q

real GDP

A

dollar value of current output using base year prices

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4
Q

calculate the GDP deflator

A

nominal GDP/real GDP x 100

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5
Q

describe the GDP deflator and gives facts about it

A

the average price of everything

  • calculated quarterly
  • only new goods/services
  • includes consumer goods and services + capital goods and services + government purchases pf new goods and services + exports
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6
Q

note differences between CPI and GDP deflator

A

CPI
- measures average price of 400 goods
- includes some used goods (houses and cars)
- calculated every month
- base year = where they get comparative prices
- survey year = where they get 400 products
- quantities of the 400 goods stay the same..as measured during the survey year
GDP Deflator
- measures average prices of everything new?
- calculated quarterly
- only new goods and services
- quantities are current outputs, and they change each period i.e. every quarter

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7
Q

what all goes into the GDP deflator?

A

NEW consumer goods and services + capital goods + government purchases of new goods and services + exports

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8
Q

What are the two approaches to calculating GDP?

A

1) expenditure approach

2) income approach

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9
Q

Expenditure Approach

A

GDP = C + I + G + (Ex-Im)

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10
Q

Income Approach

A

GDP = Labor Income + K Income + CCA + IBT

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11
Q

GDP = C + I + G + (Ex-Im)

in depth

A 
Expenditure Approach:
GDP = 
Consumer goods (approx. 2/3 of total..and services make up over 1/2 of c)
\+
Investment
\+
G (only what government BUYS)
\+ 
(Ex-Im) (net Export)
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12
Q

Labor Income + K income + CCA + IBT

A

Income Approach

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13
Q

Labor Income + K income =

A

new income at factory cost
OR
national income

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14
Q

L Income

A

income/salaries

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15
Q

K income

A

interest, rent, profits

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16
Q

IBT and CCA are…

A

money they no one really gets

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17
Q

IBT

A

indirect business tax

  • sales tax, but also more than that
  • gas tax
  • liquor tax
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18
Q

CCA

A

capital consumption allowance

  • equal to depreciation
  • CCA = DEPRECIATION
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19
Q

Draw pictures of Expenditure Approach and Income Approach

A

draw it

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20
Q

net exports = _____ and is used in which calculation

A

net exports = net exports - net income

- used in expenditure approach

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21
Q

K income = _____ and used in which calculation

A

K Income = profits + net interest + rental income

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22
Q

GDP is measured ______

A

quartely

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23
Q

remember that GDP includes _____

A

only FINAL goods and services and exports

  • don’t count wheat + flour + bread
  • just count final product = bread
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24
Q

C = _____ and is used in ______ approach

A

C = everything new bought by households, except new houses, which are considered part of investment
- used in expenditure approach

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25
TF new houses count as concumption
F
26
New houses count as _____ in the ______ approach
New Houses = Investment in the Expenditure Approach
27
I = ______
I = gross investment
28
gross investment = _____
gross change in K
29
gross change in K = _______
new structures + new equipment
30
* on exam, we will need to calculate K rather than him giving it to us when calculating Yp = X L(1/2) K(1/2) *
I = gross investment gross investment = gross change in K gross chang in K = new structures + new equipment
31
net investment =
gross investment - depreciation
32
G =
government purchases NOT what it gives away
33
government purchases =
state, local, federal purchases
34
what the gov gives away =
``` Transfer Payments = - social security - Welfare - Medicare NOT calculated in G, in the expenditure approach ```
35
another symbol for GDP =
P
36
REVIEW: GDP =
the price of everything
37
REVIEW: equation for GDP =
nominal GDP / real GDP x 100
38
nominal GDP =
current output at current prices
39
real GDP =
current output at base year prices
40
More exact equation for GDP Deflator =
current output at current prices / current output at be year prices x 100
41
in class example of stocks
H20 in tub --> 32 gallons
42
in class example of stocks
H20 per minute --> coming out of faucet
43
stock formula and description
summation of flow - has no time limit - just an amount
44
flow formula and description
change in stock - time limit - ratio
45
if these are stocks, flows are _____ - Wealth - K stock - National Debt
- savings/period - net investment/period - this period's government budget surplus or deficit
46
if these are flows, stocks are _____ - net investment/period - savings/period - the period's government budget surplus or deficit
- K stock - wealth - national debt
47
net investment =
gross investment - depreciation
48
gross investment =
new structures + new equipment
49
calculation current K stock =
current K = last years K + net investment
50
net investment =
gross investment - depreciation
51
gross investment =
new structures + new equipment
52
3 Major Issuers for Savings
1) savings cannot be too little or country will not grow 2) savings cannot be too much or GDP will fall 3) savings has to be just right and this is different for every country
53
Government Budget =
[(Gross Tx - Tr) - G] OR [Gross Tx - Government outlays]
54
equation for government outlays =
Tr + G
55
what are government outlays?
spending or distribution of money
56
How is investment financed?
LOANS created by: - business savings = retained earnings + business savings - household savings - international borrowing
57
GDP v GNP
GDP - output in the 50 states - includes foreign output in the USA i.e. a visiting professor from China salary = American GDP GNP - income from productive activity of American workers/firms anywhere in the world - Miami professor teaches in China salary goes to our GNP
58
GNP/GDP formula
GNP = GDP - [foreign output in US] + [US output abroad]
59
net tax = | for gov budget equation
Gross Tx - Tr
60
Tx =
tax
61
Tr =
transferable funds (what government gives away) (medicare, social security, etc)

Eco 202 (8 decks)

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