CH. 3 - GDP + Econ. Growth

Question 1

Aggregate Expenditures

Answer 1

Total spending in Economy

AE = C + I + G + Xn (X - IM)

Question 2

C = Consumption

Answer 2

Expenditures by households on G + S

Question 3

I = Investment

Answer 3

Spending on new capital goods

Question 4

G = Government Spending

Answer 4

Gov. purchasing of G + S

Question 5

X = Exports
IM = Imports 
Xn = Net Exports

Answer 5

X = G + S to other countries INJECTION
IM = G + S from other countries LEAKAGE

Question 6

Injection

Answer 6

Spending NOT dependent on current income

I + X + G

Question 7

Leakage

Answer 7

Income received that does not flow directly back

S + IM + T

Question 8

Ig = Gross Investment

Answer 8

Total value of all new goods - replacement and additional capital goods

Question 9

In = Net Investment

Answer 9

Ig - Depreciation
Ig = In + Depreciation
Addition to capital stock during the year

Question 10

Transfer Payments

Answer 10

Government - oneway payments to households

Question 11

Disposable Income

Answer 11

Income after TAXES

Question 12

Income

Answer 12

Earnings of factors of production - amount per period of time

Question 13

Economic Growth

Answer 13

Increase in RGDP per capita

Question 14

Factor Market

Answer 14

The market for the factors of production

Question 15

Financial Intermediaries

Answer 15

Banks: agents b/w borrowers + lenders

Question 16

GDI = Gross Domestic Income (Y)

Answer 16

Total income received by: households, Gov. and businesses

Question 17

GDP = Gross Domestic Product

Answer 17

Value of all final G + S produced in economy

Question 18

Labor Productivity

Answer 18

Output produced per unit of labor

Question 19

Money

Answer 19

ANything accepted as medium of exchange - buy G or pay debt

Question 20

National Income Equilibrium

Answer 20

Leakages = Injections

Question 21

National Income

Answer 21

Total income earned after (-) Depreciation + Indirect Taxes

Question 22

NDI = Net Dometic Income

Answer 22

Incomes earned in country after deduction for taxes on production and depreciation

Question 23

NDP = Net Domestic Product

Answer 23

Value of total production after Depreciation and Indirect Taxes

Question 24

NNP = Net National Production

Answer 24

NDP - Net Foreign Factor Income

Value of G + S produced by Canadians (-) Depreciation + Indirect Taxes

Question 25

Net Tax Revenue

Answer 25

Tax Revenue - Transfer Payments

Question 26

Nominal GDP

Answer 26

Calculated as pricing in current year

Question 27

Real GDP

Answer 27

Calculated using BASE year prices

Question 28

Value of Production

Answer 28

Total receipts of all producers = sales revenue = AE = cost of production = total income

Question 29

Velocity of Money

Answer 29

of times a unit of currency is used per yr to buy final G + S = Total Income/GDP / Money Supply

Question 30

Savings

Answer 30

Portion of income (Y) not spent | S = Y - C

Question 31

Equilibrium

Answer 31

GDP = AE = Y

Question 32

Equation: Growth of Nominal GDP

Answer 32

= (GDP current - GDP previous) / (GDP previous) x 100

Question 33

Equation: Real GDP per Capita

Answer 33

= Real GDP / Population

Question 34

Equation: Economic Growth Rate

Answer 34

= (RGDP per capita current - RGDP previous) / (RGDP previous) x 100

Question 35

Equation: Labor Productivity

Answer 35

= Output per period / Units of Labor