Macroeconomics Flashcards
(44 cards)
Free-Market Flow Model
Government, Financial Sector, and Foreign Sector added. Concerned with flow of funds. Prior had individuals and business firms.
Free-Market Flow Model
Government, Financial Sector, and Foreign Sector added. Concerned with flow of funds. Prior had individuals and business firms.
What are leakages?
Individuals’ income not spent on domestic consumption.
Taxes, savings, and imports
What are injections?
Additions to domestic production not from individuals.
Exports, gov spending
GDP?
Nominal Gross Domestic Product - Measures the total output of final goods and services produced fore change in the domestic market during a period. FINAL GOODS.
GDP does not include goods and services for which additional processing required
Illegal activities
There is no market exchange (volunteer DIY)
Goods produced in foreign countries by US owned entities…only DOMESTIC
Nominal is GDP not adjusted for prices
Two approaches of GDP measurement
1) Expenditures - Using final sales/purchases; the sum of pending by individuals, businesses, governments, foreign buyers (exports)
2) Income - measures GPD as value of incomes and resources’ costs the sum of:
Real GPD?
Measures the total output of final goods and services produce for exchange in domestic market during a period at CONSTANT prices. Nominal GDP adjusted for changing prices (index)
Real GDP per capita = Real GDP/population; changes in standards of living
NDP - Net Domestic Product
Measures GDP less capital consumption (GDP-depreciation)
Potential GDP
Maximum output that can occur in domestic economy without creating upward pressure on general level of prices (inflation) - assumes full use of current resources and technology; estimated adjusting actual GDP
PRODUCTION-POSSIBILITY FRONTIER - Conceptual maximum amount of various goods and services an economy can produce at a given time
GDP Gap
Difference between Real GDP and Potential GDP
Real GDP Potential = Negative GDP GAP creates upward pressure on prices
GNP vs GDP
GNP - Measures total output of all goods and services produced world-wide using US resources; includes goods and services in foreign countries
NNP - Net National Product
Net National Product - Measures the total output of all goods and services produced worldwide using US resources but does not include depreciation (only includes cost of investment in new capital)
National Income (NI)
Total payments for economic resources included in the production of all goods and services
Personal Income (PI)
Measures total payments for economic resources received by individuals; PI = NI - Corporate profits - SS + Dividends and interest received by individuals + Government
PDI - Personal Disposable Income
Measures amount of income individuals have available for spending, after taxes are deducted from total personal
Employment/Unemployment
Frictional Unemployment
Those not employed because in transition; ex - moving to seek employment, those looking for job they believe meets their education or experience
Structural Unemployment
Need for prior types of jobs greatly reduced or eliminated; lack skills for currently available jobs
Cyclical Unemployment
Downturn in business cycle (economic - recession)
Unemployment Rate
Percentage of labor force not employed; natural unemployment rate = those unemployed due to frictional, structural, and seasonal reasons (will have this regardless of state of economy)
Full employment is only when there is no cyclical unemployment
What are leakages?
Individuals’ income not spent on domestic consumption.
Taxes, savings, and imports
What are injections?
Additions to domestic production not from individuals.
Exports, gov spending
GDP?
Nominal Gross Domestic Product - Measures the total output of final goods and services produced fore change in the domestic market during a period. FINAL GOODS.
GDP does not include goods and services for which additional processing required
Illegal activities
There is no market exchange (volunteer DIY)
Goods produced in foreign countries by US owned entities…only DOMESTIC
Nominal is GDP not adjusted for prices
Two approaches of GDP measurement
1) Expenditures - Using final sales/purchases; the sum of pending by individuals, businesses, governments, foreign buyers (exports)
2) Income - measures GPD as value of incomes and resources’ costs the sum of:
