CH. 3 - GDP + Econ. Growth Flashcards
Aggregate Expenditures
Total spending in Economy
AE = C + I + G + Xn (X - IM)
C = Consumption
Expenditures by households on G + S
I = Investment
Spending on new capital goods
G = Government Spending
Gov. purchasing of G + S
X = Exports IM = Imports Xn = Net Exports
X = G + S to other countries INJECTION IM = G + S from other countries LEAKAGE
Injection
Spending NOT dependent on current income
I + X + G
Leakage
Income received that does not flow directly back
S + IM + T
Ig = Gross Investment
Total value of all new goods - replacement and additional capital goods
In = Net Investment
Ig - Depreciation
Ig = In + Depreciation
Addition to capital stock during the year
Transfer Payments
Government - oneway payments to households
Disposable Income
Income after TAXES
Income
Earnings of factors of production - amount per period of time
Economic Growth
Increase in RGDP per capita
Factor Market
The market for the factors of production
Financial Intermediaries
Banks: agents b/w borrowers + lenders
GDI = Gross Domestic Income (Y)
Total income received by: households, Gov. and businesses
GDP = Gross Domestic Product
Value of all final G + S produced in economy
Labor Productivity
Output produced per unit of labor
Money
ANything accepted as medium of exchange - buy G or pay debt
National Income Equilibrium
Leakages = Injections
National Income
Total income earned after (-) Depreciation + Indirect Taxes
NDI = Net Dometic Income
Incomes earned in country after deduction for taxes on production and depreciation
NDP = Net Domestic Product
Value of total production after Depreciation and Indirect Taxes
NNP = Net National Production
NDP - Net Foreign Factor Income
Value of G + S produced by Canadians (-) Depreciation + Indirect Taxes
Net Tax Revenue
Tax Revenue - Transfer Payments
Nominal GDP
Calculated as pricing in current year
Real GDP
Calculated using BASE year prices
Value of Production
Total receipts of all producers
= sales revenue = AE
= cost of production = total income
Velocity of Money
of times a unit of currency is used per yr to buy final
G + S
= Total Income/GDP / Money Supply
Savings
Portion of income (Y) not spent
S = Y - C
Equilibrium
GDP = AE = Y
Equation: Growth of Nominal GDP
= (GDP current - GDP previous) / (GDP previous) x 100
Equation: Real GDP per Capita
= Real GDP / Population
Equation: Economic Growth Rate
= (RGDP per capita current - RGDP previous) / (RGDP previous) x 100
Equation: Labor Productivity
= Output per period / Units of Labor
