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Macroeconomics > #2 The Data Of Macroeconomics > Flashcards

#2 The Data Of Macroeconomics Flashcards

1
Q

Gross Domestic Product - Expenditure
GDP

A

Total expenditure on domestically produced final goods and services

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2
Q

Gross Domestic Product - income
GDP

A

Total income earned by domestically located factors of production

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3
Q

Expenditure equals what

A

Income cuz every dollar buyer spends becomes income to the seller

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4
Q

Value added

A

Value of output minus value of the intermediate goods used to produce that output

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5
Q

GDP

A

Equals value of final goods produced = sum of value added at all stages of production

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6
Q

GDP function

A

Y = C + I + G + NX

Y - value of total output
C + I + G + NX - aggregate expenditure

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7
Q

Consumption

A

Value of all goods and services bought by households

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8
Q

Consumption includes:

A
  1. Durable goods
  2. Nondurable goods
  3. Services
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9
Q

Durable goods

A

Last a long time
Ex- cars, home appliances

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10
Q

Nondurable goods

A

Last a short time
Ex- food, clothing

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11
Q

Services

A

Intangible/non-physical items or activities purchased by consumers
Ex- dry cleaning, air travel, concerts

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12
Q

Investment

A

Spending on capital, a physical asset used in future production

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13
Q

Investment includes:

A
  1. Business fixed investment
  2. Residential fixed investment
  3. Inventory investment
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14
Q

Business fixed investment

A

Spending on plant a equipment

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15
Q

Residential fixed investment

A

Spending by consumers and landlords on housing units

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16
Q

Inventory investment

A

The change in the value of all firms’ inventories

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17
Q

Government spending

A

All government spending on goods and services
Ex- purchases of trains and installation of subway rail

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18
Q

G (government spending) excludes…

A

Transfer payments
Ex- unemployment insurance payments, cuz they don’t represent spending on goods and services

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19
Q

Net Exports

A

Equals net spending from abroad on our g&s

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20
Q

NX =

A

Exports - Imports

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21
Q

Exports

A

Value of g&s sold to other countries

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22
Q

Imports

A

Value of g&s purchased from other countries

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23
Q

Trade deficit doesn’t …

A

Does not reduce GDP

24
Q

Stock

A

Quantity measured at a point in time

25
Q

Flow

A

Quantity measured per unit of time

26
Q

GDP measures:

A
  1. Total income
  2. Total output
  3. Total expenditure
  4. The sum of value added at all stages in the production of final goods
27
Q

Gross National Product (GNP)

A

Total income earned by the nation’s factors of production, regardless of where located

28
Q

Gross Domestic Product (GDP)

A

Total income earned by domestically located factors of production, regardless of nationality

29
Q

GNP - GDP

A

Factor payments from abroad - Factor payments to abroad

30
Q

Factor payments

A

Ex- wages, profits, rent, interest and dividends on assets

31
Q

Nominal GDP

A

Measures these values using current prices

32
Q

Real GDP

A

Measures these values using the prices of a base year

33
Q

Changes in nominal GDP can be cuz of…

A

Changes in prices
Changes in quantities of output produced

34
Q

Changes in real GDP can be cuz of…

A

Only cuz of changes in quantities, because GDP is constructed using constant base-year prices

35
Q

Inflation rate

A

The percentage increase in the overall level of prices

36
Q

GDP Deflator

A

100 x Nominal GDP / Real GDP

37
Q

GDP Deflator is

A

Weighted average of prices.
Weight on each price reflects that good’s relative importance in GDP
—-> Weight changes over time

38
Q

Percentage change fact #1

A

% change in (XY) = % change in X + % change in Y

39
Q

Percentage change fact #2

A

% change in ( X / Y ) = % change in X - % change in Y

40
Q

Chain-weighted real GDP

A

Updates the base year every year, so it’s more accurate than constant-price GDP

41
Q

Consumer Price Index
CPI

A

Measure of the overall level of prices

42
Q

CPI uses

A
  1. Tracking changes in typical household’s cost of living
  2. Adjusting many contracts for inflation (“COLAs”)
  3. Allowing comparisons of $ amounts over time
43
Q

CPI in any month equals

A

100 x Cost of basket in that month / Cost of basket in base period

44
Q

CPI

A

Is a weighted average of prices

The weight on each price reflects that good’s relative importance in the CPI’s basket

—> weights remain fixed over time

45
Q

Why CPI may overstate inflation

A
  1. Substitution bias
  2. Introduction of new goods
  3. Unmeasured changes in quality
46
Q

CPI vs GDP Deflator
Prices of capital goods

A

Included in GDP Deflator
Excluded from CPI

47
Q

CPI vs GDP Deflator
Prices of imported consumer goods

A

Excluded from GDP Deflator
Included in CPI

48
Q

CPI vs GDP Deflator
The basket of goods

A

GDP Deflator: changes every year
CPI: fixed

49
Q

Personal Consumption Expenditures (PCE) deflator

A

The ration of nominal to real consumer spending

50
Q

PCE is like CPI…

A

Only includes consumer spending
Includes imported consumer goods

51
Q

PCE is like GDP Deflator…

A

The “basket” changes over time

52
Q

Core inflation

A

Another measure of inflation that excludes food and energy prices

53
Q

Categories of population

A
  1. Employed (working at a paid job)
  2. Unemployed (not employed but looking for job)
  3. Labor Force (amount of labor available for producing g&s, employed + unemployed)
  4. Not in labor force (not employed, not looking for work)
54
Q

2 labor-force concepts

A

Unemployment rate

Labor-force participation rate

55
Q

Unemployment rate

A

% of labor force that is unemployed

56
Q

Labor-force participation rate

A

Fraction of the adult population that participates in the labor force- working or looking for work

Macroeconomics (8 decks)

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