Mini Midterm (Ch. 23) Flashcards Preview

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Flashcards in Mini Midterm (Ch. 23) Deck (18)
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1

microeconomics

The study of how households and firms make decisions and how they interact in markets.

2

Macroeconomics

The study of economy-wide phenomena, including inflation, unemployment, and economic growth.

3

gross domestic product (GDP)

The market value of all final goods and services produced within a country in a given period of time.

4

consumption

Spending by households on goods and services, with the exception of purchases of new housing.

5

investment

spending on capital equipment, inventories, and structures, including household purchases of new housing

6

Government purchases

spending on goods and services by local, state, and federal governments

7

Net Exports

spending on domestically produced goods by foreigners (exports) minus spending on foreign goods by domestic residents (imports)

8

Nominal GDP

the production of goods and services valued at current prices

9

Real GDP

the production of goods and services valued at constant prices

10

GDP Deflator

a measure of the price level calculated as the ratio of nominal GDP to real GDP times 100

11

Because every transaction in an economy has a buyer and seller.....

Total expenditure = total income

12

GDP measures an economy's....

Total expenditure on newly produced goods/services and total income earned from production.

13

GDP is the....

Market value of all final goods and services produced within a country in a given period of time.

14

4 expenditure divisions of GDP:

Consumption, Investment, Government Purchases, and Net Exports.

15

Nominal GDP uses...

Current prices to value production of goods and services of an economy.

16

Real GDP uses....

Constant base-year prices to value an economy's production of goods and services.

17

GDP deflator measures...

The level of prices in the economy.

18

Why is GDP a good measure of economic well-being?

People prefer higher to lower incomes. However, GDP excludes value of leisure and clean environment.