Unit 2-measuring The Performance In The Economy Flashcards
(22 cards)
What is national accounts
Methods used to measure the performance of the economy
What is account 1
Gross domestic product and gross domestic expenditure
What is GDP
The market value of final goods and services produced within the boarders of a country for a one year period
What is a final good
Everything that is produced and sold to the end user for consumption
What is the difference between GDP and GNP
GDPX measures production that takes place inside the country both by citizens and foreigner
While GNP measures production that takes in in a country by its citizens excludes production of foreigner
What are the 3 methods to calculate GDP
Income method
Expenditure method
Value added method
What is the income method
Involves adding coming received by the four factors of production
What is the expenditure method
Involves counting expenditure on goods and services by the 4 sectors of the economy
What is the value added method
Measures the activities inside businesses that occur as products move through different stages of production
Why are taxes on production and products in the income method added
They increase the market prices of goods and services
What is GDP at factor cost
Measures the cost to businesses to employ the four factors of production
What is GDP at market prices
Includes the prices consumers will pay for goods and services on the market
What is the difference between GDP at factor cost and GDP at market prices
The taxes and subsidies levied by the government
Expenditure by households on all finallngoods and services can be divided into wha5 categories
Durable goods
Semi-durable goods
Non durable goods services
What are durable goods
Goods that are not used up in the consumption process and last longer than one year( furniture cars)
What are semi durable goods
Goods that can be used for a period of time but don’t last as long as durable goods (shoes clothing )
What are non durable goods
Goods that can be consumed only once ( food, petrol, cigarettes)
What are services
Goods tha5 are consumed as they are produces ( transport services, medical services
Wha5 does the general government include
Central government
Regional gov
Local government
What 2 components does gross capital formation consist of
Gross fixed capital formation
Change in inventories
What is potential GDP
Refers to the GDP the economy could have earned if all their productive resources were at full employment
