the macro economy

Question 1

national income

Answer 1

a country’s total output

Question 2

national income statistics

Answer 2

measures of the total output (income and expenditure) of an economy

Question 3

GDP gross domestic product

Answer 3

the total output produced in a country

Question 4

GNP gross national income

Answer 4

GDP plus net income from abroad

Question 5

net property income from abroad

Answer 5

receipts of profit, rent and interest earned on the ownership of foreign assets minus the payments of profit , rent and interest to non-residents

Question 6

compensation of employees

Answer 6

income of workers who work in another country for a short period of time

Question 7

gross national disposable income

Answer 7

GNI plus net transfer of workers’ to their relatives and from other country’s

Question 8

multinational companies MNCs/TNCs

Answer 8

firms that operate in more than one country

Question 9

circular flow of income

Answer 9

a simplified view on how income flows around the economy

Question 10

output method

Answer 10

a way of measuring GDP by calculation the total of production of goods and services of the country

Question 11

value added

Answer 11

the difference between the price at which products are sold and the price of goods and services used in their production

Question 12

income method

Answer 12

a way of measuring GDP by totalling all the incomes earned in producing the country’s output

Question 13

expenditure method

Answer 13

a way of calculating GDP by totalling all the spending on the country’s output

Question 14

market prices

Answer 14

prices paid by consumers; they then take into account indirect taxes and subsides

Question 15

Basic prices

Answer 15

prices charged by producers before the addition of indirect taxes and the deduction of subsides

Question 16

gross investment

Answer 16

total spending on capital goods

Question 17

net domestic product (NDP)

Answer 17

GDP minus depreciation

Question 18

net national income (NNI)

Answer 18

gross national income GNI - depreciation

Question 19

net investment

Answer 19

additions to the capital stock

Question 20

depreciation (of capital goods)

Answer 20

the value of capital goods have worn out or become out of date.

Question 21

open economy

Answer 21

an economy that is involved in trade with other economies

Question 22

closed economy

Answer 22

an economy that does not trade with other economies

Question 23

injections (circular flow of income)

Answer 23

additions to the circular flow of income

Question 24

examples of injections to (circular flow of income)

Answer 24

gov spending, investment and exports

Question 25

leakages (circular flow of income)

Answer 25

withdrawals from the circular flow of income

Question 26

examples of leakages to (circular flow of income)

Answer 26

saving, direct taxes, imports and indirect taxes

Question 27

equilibrium and disequilibrium in the circular flow show how and why the macroeconomic equilibrium can change

Question 28

a injection will cause circular flow of income to rise but over time leakages rise to match the total higher injections

Question 29

aggregate demand (AD)

Answer 29

the total demand for an economies goods and services at a given price level in a given period of time

Question 30

consumer expenditure

Answer 30

spending by households on goods and services

Question 31

dissaving

Answer 31

where consumer expenditure exceeds income, with people or countries drawing on past savings or borrowing

Question 32

saving

Answer 32

income minus consumption

Question 33

investment

Answer 33

spending on capital goods

Question 34

government spending

Answer 34

the total of local and national government expenditure on goods and services

Question 35

net exports

Answer 35

exports minus imports

Question 36

exchange rate

Answer 36

the price of one currency in terms of another currency

Question 37

aggregate supply (AS)

Answer 37

the total output (real GDP) the producers in an economy are willing Gand able to supply at a given price level in a given amount of time

Question 38

short run aggregate supply (SRAS)

Answer 38

the total output of an economy that will be supplied when there has not been enough time for the prices of factors of production to change

Question 39

long run aggregate supply (LRAS)

Answer 39

the total output of a country supplied in the period when prices of factors of production are fully adjusted

Question 40

what are on the axis of a AS/AD graph

Answer 40

bottom = real GDP vertical = price level

Question 41

things that may cause a change in AD?

Answer 41

consumer/government spending, investment and net exports

Question 42

what may cause a shift in the short run of AS?

Answer 42

change in price of factors of production, change in tax, a change in factor productivity/ quality of resources, a change in the quantity of resources or supply side shocks

Question 43

Keynesians shape of LRAS curve

Answer 43

elastic at low levels of output and inelastic at high ( gov intervention)

Question 44

average cost

Answer 44

the cost per unit of output

Question 45

supply side shocks

Answer 45

large and unexpected changes in short run aggregate supply

Question 46

keynesians

Answer 46

people who agree with the view of the economist John Maynard Keynes (1883-1946) that government intervention is needed to achieve full employment

Question 47

new classical economists shape of LRAS curve

Answer 47

vertical line (no gov intervention)

Question 48

new classical economists

Answer 48

economists who think that the LRAS curve is vertical and that the economy will move toward full employment without government intervention

Question 49

macroeconomic equilibrium

Answer 49

the output and the price level achieved where AS meets or is equal to AD