Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

AP Macro > 2.1 Circular Flow Model & GDP > Flashcards

2.1 Circular Flow Model & GDP Flashcards

1
Q

The Product Market

A

the “place” where goods & services produced by businesses are sold to households

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

The Resource (Factor) Market

A

the “place” where resources ( land, labor, capital, entrepreneurship) are sold to businesses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What does the resource market give to businesses

A

Resources

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What do businesses give to the Product Market

A

Goods & Services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What does the Product Market give to Individuals ?

A

Goods & Services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What do Individuals give to the Resources Market?

A

Resources

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What does the Resource Market give to Individuals

A

Income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What do Individuals give to the Product Market?

A

Money/Spending

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What does the Product Market give to Businesses?

A

Revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What do Businesses give to the Resource Market?

A

Money/ Costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What do Gov. get from individuals & businesses

A

Taxes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What do Gov. give individuals?

A

Welfare & Public Goods

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What does Gov. give to businesses?

A

Subsides & Public Goods

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Private Sector

A

Part of the economy that is ran by individuals & businesses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Public Sector

A

Part of the economy that is controlled by the gov.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Factor Payment

A

Payment of factors of production, namely rent, wages, interest, & profit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Transfer Payment

A

When the gov. redistributes income ( welfare, social security)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Subsides

A

Gov. payment to businesses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What are the 3 Macro goals all Countries have ?

A
  1. Promote Economic Growth
  2. Limit Unemployment
  3. Keep Prices Stable ( Limit Inflation)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Gross Domestic Product (GDP)

A

The dollar value of all final good & services produced within a country in one year

21
Q

Dollar Value

A

GDP measures in dollars

22
Q

Final Good

A

GDP only counts NEW goods & services

23
Q

How is GDP used?

A

1.Compare to previous yesrs( is there growth?)

  1. Compare policy changes (Did a new policy work)
  2. Compare to other countries ( Are we better off?)

% Change in GDP = Year 2- Year 1/ Year 1 x 100

24
Q

GDP Per Capita ( per person)

A

GDP divided by the population. It identifies in average how many products each person makes

It is the best measure of a nation’s standard of living

25
Q

Economic System

A

Capitalism promotes innovation & provides incentives to improve productivity

Reason some countries have higher GDP

26
Q

Rule of Law

A

Countries w/ solid institutions & political stability have historically had more economic growth

Reason Higher GDP Countries

27
Q

Capital Stock

A

Countries that have more machines & tools are more productive

Reason Higher GDP Countries

28
Q

Human Capital

A

Countries that have better education & training are more productive

Reason Higher GDP Countries

29
Q

Natural Resources

A

Countries that have access to more natural resources are more productive

Reason Higher GDP Countries

30
Q

Intermediate Goods

A

Goods inside final goods don’t count towards GDP

31
Q

Nonproduction Transaction

A

Financial Transaction ( nothing produced)

  • stocks, bonds

Used Goods

-used car & clothes

32
Q

Non-Market & Illegal Activities

A

Things made at home - household production.
Ex: taking care of your kids

Black Market- Unpaid Labor, Black Market

33
Q

Expenditure Approach

A

Add up all the spending on final goods & services produced in a given year

C + G + I + Xn
Calculate GDP

34
Q

Income Approach

A

Add up all the income earned from selling all final goods & services produced in a given year

Labor + Rental + Interest + Profit
Calculate GDP

35
Q

Value- Added Approach

A

Add up the dollar value added at each stage of the production process

Calculate GDP

36
Q

Labor Income

A

Wages earned from performing work

37
Q

Rental Income

A

Income earned from property owned by individuals

38
Q

Interest Income

A

Interest earned from loaning money to businesses

39
Q

Profit

A

Money businesses have after paying all their costs

40
Q

Consumer Spending

A

Purchase of final goods & services by individuals

41
Q

Businesses Investments

A

Business spending on tools & equipment

42
Q

Gov. Spending

A

Ex: Schools , Tanks

Not Transferable Payments

43
Q

Net Export

A

Export(x) - Import(m)

44
Q

3 Components of Consumer Spending

A
  1. Durable Goods: refrigerator & washing machines
  2. Non-Durable Good: food & clothes
  3. Services: dental work & tutoring
45
Q

What does investment mean in GDP?

A

When Businesses buy capital like machines, resources & tools

46
Q

What is Gov. Spending

A

Gov. Payments for goods & services not transfer payment like welfare & social security

47
Q

What does the financial sector give to businesses?

A

Private Borrowing

48
Q

What does financial sector give to the government?

A

Public Borrowing

49
Q

What does gov. give to the financial sector?

A

Public Savings

AP Macro (40 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions