GDP---> fiscal polciy Flashcards
(30 cards)
what is GDP
new good/services made this year in the USA
how is GSP measured
in “quarters” of years
C + Ig + G + Xn
what does “C” stand for in the GDP formula?
personal consumption
- the purchase of finished goods and services (not houses)
what does “Ig” stand for in the GDP formula?
Gross private business investment monies
- factory equipment maitence, new factory equipment, construction of housing, unsold inventory of products built in a year
what does “G” stand for in the GDP formula?
government spending
- government purchases of Prodcuts and services (military, roads, teachers)
what does “Xn” stand for in the GDP formula?
net foreign factor of trade: exports minus imports
what is the GDP income approach?
W + R + I + P + SA
what items do not count in GDP
- used goods
- gifts or “transfers”
- stock, equity/securities purchase
- unreported business activities conducted in cash (unreported tips)
- illegal activities
- financial transaction between banks and businesses
- “intermediate goods”
- “non market” activities (volunteer or family work)
what does the “W” stand for in the income approach?
wages: money earned by workers
what does the “R” stand for in the income approach?
rent” money earned by those who lease land structures
what does the “I” stand for in the income approach?
money earned by those who lend savings to firms and governments
what does the “P” stand for in the income approach?
money earned by firm owners that is not paif out in wages, interest, or rent
what are the three parts of statistical adjustment?
- depreciation
- business taxes (sales tax)
- net foreign income
what is depreciation
- business set aside money (spending) of their own to account for declining value of goods such as equipment. This is a loss of income to them.
is business tax a loss of income to the buisness?
yes, this is because they do not keep the sales tax, they pass it along to the government
what is net foreign income
if foreigners earn money in the US that money leaves the US so it does not represent an increase in income in the US GDP. If US citizens earn money from investments in foriegn places, then money flows into the US
what is inflation?
over time when prices tend to increase
what r the 2 different types of GDP
Nominal and real
what is nominal GDP
current output and current prices (not adjusted for inflation)
- price x quantity of each good added together
(AQ x A$) + (BQ x B$) +…
