Macroeconomics Lecture 1 - The National Economy Flashcards Preview

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Flashcards in Macroeconomics Lecture 1 - The National Economy Deck (10):
1

National income accounting definition

An accounting framework used in measuring current economic activity (GDP)

Note - all 3 methods of measuring gdp will give the same result

2

Product Method (NIA)

The amount of output produced

Measures the final market value of final goods and services produced domestically during a fixed period of time

3

Income Method (NIA)

The income generated by production

Adds up all domestic income generated by production (including profits and taxes paid to the government)

4

Expenditure Method (NIA)

The amount of spending by purchasers

Measures total spending on final goods and services domestically during a specific period of time

C + G + I + X - M

5

GDP Definiton

Gross domestic product

Only measuring domestically, nothing abroad

6

GNP definition

Gross national product

Eg. If i build something in a different country, this would be included in my GNP, and the other countries GDP, as my country has produced it

7

Nominal GDP

GDP without inflation factored in.

8

Real GDP

GDP With inflation factored in

9

Population per head

GDP/Population

10

How do you compare GDPs

Convert them into a common currency as we will be dealing with different currency eg EUR and GBP. Purchasing power parity rate takes the purchasing power of currencies into account in order to facilitate international GDP comparisons.