01 - Macroeconomic Aggregates

Question 1

Definition Consumption

Answer 1

market value of consumption goods and services bought by domestic households

Question 2

Definition Investment

Answer 2

Market value of new physical capital bought by domestic households and domestic firms

Question 3

Government Expenditrues

Answer 3

market vale of government purchases of goods and services (for both, consumption and investment purposes)

Question 4

What are Exports?

Answer 4

market value of goods and services produced domestically and sold abroad

Question 5

What are Imports?

Answer 5

market value of goods and services produced abroad and sold domestically

Question 6

GDP of country as closed economy

Answer 6

Y = C + I + G (C is consumption, M imports, X exports, I investment, G government expenitures)

Question 7

GDP of country as open economy

Answer 7

Y = C + I + G + X - M

Question 8

What is X - M?

Answer 8

trade balance

Question 9

whats the national income accounting identity?

Answer 9

Y = C + I + G + X - M

Question 10

Income based accounting….

Answer 10

… sums up payments or income received by labor and the owners of physical or financial capital

Question 11

Labor income is…

Answer 11

…. ANY form of payment that compensates people for their work, e.g. wages, free coffee at work, pension benefits

Question 12

Capital income is…

Answer 12

… ANY form of payment that derives from owning phsycial or financial capital, e.g. dividends to shareholders, rents paid to landlords

Question 13

What are examples for things let out of GDP that are actually important to keep in mind?

1.
2.
3.
4.
5.

Answer 13

• physical capital depreciation (10-20%) (of physical capital stock and resources)
• home production (child care, cooking) 30-50% for developed countries
• underground economy (ca. 10% in developed countries)
• digital for FREE services (e-mail, video conferencing), around 1/3 of value added of traded goods
• positive and negative externalities of country

Question 14

Macroecnomics is the study of….

Macroeconomicstd study…. (2)

Answer 14

… aggregate economic activity / the economy as a whole
1. economy wide phenomena such as annual growth of a country
2. design government policies aimed at improving overall economic performance

Question 15

GDP is…. and all measures should yield in…

Answer 15

… measure of aggregate economic output / the market value of the final goods and services produced in a country during a given period of time
Production = Expenditure = Income

Question 16

NAtional Income Accounty measure….

Answer 16

…. the level of economic activity in a country

Question 17

Production based accounting sums up…

Answer 17

…. each firms value added, which is the firms sales revenue minus the firms purchases of intermediate products from other firms

Question 18

Expenditure based accounting…

Answer 18

…. sums up the purchases of goods and services by different groups or categories

Question 19

Digital for free services as a detail left out of GDP | How can we measure such a free service?

Answer 19

asking consumers / surveys

Question 20

What is an externality?

Answer 20

• when an economic activity has a positive or negative spillover effect on a bystander

Question 21

Difference GDP and GNP?

Answer 21

• GDP: records production within certain country regardless of whose labor and capital (domestic or foreign) is used
• GNP: records production of domestically owned labor and capital within the country and elsewhere

Question 22

Whats the equation for GNP?

Answer 22

GDP + production of the countries production factors in foreign countries - production of foreign owned production facotrs within the country