CH 12 Flashcards
Components of GDP (4)
Personal Consumption, Gross Private domestic investment, Government purchases, and Net Exports
Flow variable
A variable that is measured over a specific period of time
Stock Variable
A variable that is independent of time (I.e. balance in a checking account)
Circular flow model
A model that shows the flows of spending and income through the economy
Personal Consumption
A flow variable that measures the value of goods and services purchased by households during a time period
Gross Domestic Private Investment
The value of all goods produced during a period for use in the production of other goods and services
Government purchases
The sun of purchases of goods and services from firms by gov’t agencies + total value of output produced by gov’t agencies during a time period
Transfer Payments
Payments that do not require the recipient to produce a good or service in order to receive them
Exports
Sales of a country’s goods and services to buyers in the rest of the world during a particular time period
Trade deficit
Negative net exports, when imports exceed exports
Trade surplus
When exports exceed imports, positive net exports
Value added
The amount by which the value of a firms output exceeds the value of the goods and services the firm purchases from other firms
Gross National Product (GNP)
The total value of final goods and services produced during a particular period with factors of production owned by the residents of a particular country
Gross Domestic Income
The total income generated in an economy by the production of final goods and services during a particular period
Depreciation
A measure of the amount of capital that wears out or becomes obsolete during a period
