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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
Flow
Quantity measured per unit of time
26
GDP measures:
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
Gross National Product (GNP)
Total income earned by the nation’s factors of production, regardless of where located
28
Gross Domestic Product (GDP)
Total income earned by domestically located factors of production, regardless of nationality
29
GNP - GDP
Factor payments **from** abroad - Factor payments **to** abroad
30
Factor payments
Ex- wages, profits, rent, interest and dividends on assets
31
Nominal GDP
Measures these values using current prices
32
Real GDP
Measures these values using the prices of a base year
33
Changes in nominal GDP can be cuz of…
Changes in prices Changes in quantities of output produced
34
Changes in real GDP can be cuz of…
Only cuz of changes in quantities, because GDP is constructed using constant base-year prices
35
Inflation rate
The percentage increase in the overall level of prices
36
GDP Deflator
100 x Nominal GDP / Real GDP
37
GDP Deflator is
Weighted average of prices. Weight on each price reflects that good’s relative importance in GDP —-> Weight changes over time
38
Percentage change fact #1
% change in (XY) = % change in X + % change in Y
39
Percentage change fact #2
% change in ( X / Y ) = % change in X - % change in Y
40
Chain-weighted real GDP
Updates the base year every year, so it’s more accurate than constant-price GDP
41
Consumer Price Index CPI
Measure of the overall level of prices
42
CPI uses
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
CPI in any month equals
100 x Cost of basket in that month / Cost of basket in base period
44
CPI
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
Why CPI may overstate inflation
1. Substitution bias 2. Introduction of new goods 3. Unmeasured changes in quality
46
CPI vs GDP Deflator Prices of capital goods
Included in GDP Deflator Excluded from CPI
47
CPI vs GDP Deflator Prices of imported consumer goods
Excluded from GDP Deflator Included in CPI
48
CPI vs GDP Deflator The basket of goods
GDP Deflator: changes every year CPI: fixed
49
Personal Consumption Expenditures (PCE) deflator
The ration of nominal to real consumer spending
50
PCE is like CPI…
Only includes consumer spending Includes imported consumer goods
51
PCE is like GDP Deflator…
The “basket” changes over time
52
Core inflation
Another measure of inflation that excludes food and energy prices
53
Categories of population
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
2 labor-force concepts
Unemployment rate Labor-force participation rate
55
Unemployment rate
% of labor force that is unemployed
56
Labor-force participation rate
Fraction of the adult population that participates in the labor force- working or looking for work

Macroeconomics (8 decks)

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