Week 4- Measuring Domestic Output and National Income lecture Flashcards Preview

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Flashcards in Week 4- Measuring Domestic Output and National Income lecture Deck (32):
1

National income accounting looking at the___

Overall performance of the economy.

2

Bureau of Economic Analysis gathering data on___

Income and Product Accounts on US economy.

3

Gross Domestic Product measures___

Total market value of all value of goods produced in a given year.

4

GDP including all goods___

- Produced by citizen or goods produced on US soil.

5

GDP can be used as Monetary Measurement to compare relative values over___

Different years of producing different amount of goods and services.

6

GDP only values____

Final goods and ignores intermediate goods (goods purchased for resale or for further processing).

7

Final goods___

Goods in stores ready to be purchases.

8

Value added tells us how much___

Each goods worth on our process to final goods.

9

GDP excludes___

Nonproduction transaction (financial transaction and second hand sales).

10

Public transfer payments are___

Payments gov’t makes directly to households that contribute nothing to current production in return.

11

Private transfer payments are___

Funds transfer from 1 person to the other.

12

Stock market transactions___

Purchasing stock.

13

2 ways to look at GDP:
1. Spending___
2. Income___

1. GDP as the sum of all money spent in buying goods.
2. GDP as income created from producing that goods.

14

Personal consumption expenditure: all the money that households spent on ___

Durable (3+ yr), and non-durable (food) consumer goods.

15

Noninvestment transaction___

investments creating new capital assets (create jobs, income).

16

Gross investment___

Final purchases of machinery, equipment, tool…ALL investment of goods.

17

Depreciation___

only investment in form of added capital (new).

18

Gov't purchases includes:
1. Expenditure for goods___
2. Expenditure for social capital___

1. that gov’t consumes by providing public services.
2. school, highway. Have long life time.

19

Net exports (Xn)___

Xn=X – M X= export M= import.

20

GDP formula:

GDP= C+Ig+G+Xn-----Personal consumption + Gross investment + Gov’t spending + net exports.

21

Rent___

- income from supply property resources.

22

Compensation___

income from labor resources.

23

Interest___

money paid by private businesses to suppliers of money capital.

24

Proprietor’s Income___

net income of partnership and other businesses.
Corporation have limited liability.

25

National income includes all income that___

flow to American supplied resources, whether they’re here or abroad.

26

Net Domestic Product___

GDP adjusted for depreciation.

27

Personal Income___

Income earned as individuals.

28

Disposable Income formula___

C + S consumption + saving. OR personal income – taxes.

29

Nominal (unadjusted) GDP-

unadjusted for inflation. Often appears higher than real GDP.
Calculation: =P1+Q1+P2Q2...

30

Real GDP___

adjusted for inflation.

31

Price index___

measures price of specified collection of goods called market basket.

32

Shortcoming of GDP___

1. Leisure: Ignore leisure value when looking at GDP.
2. Underground economy: sell illegal stuff. Can’t track or measure.