CH 5 Flashcards
What is GDP?
Real vs. Nominal?
Gross Domestic Product- The total value–of all final–goods and services..produced..for the marketplace..during a given period..within the nations borders.
Reported quarterly, but at that quarters rate for the year.
R: Adjusted for inflation
Nom: not adjusted for inflation.
Expenditure Approach:
1 way of measuring GDP that breaks consumers into 4 categories,
GDP=C, I, G, NX
Consumption, Investment, Government, NX
Consumption- What is it? What is estimated? What is exempt?
In General: Purchased by households as final users. Largest portion of GDP (70%)
Estimated: Food- self-produced and consumed; RENT for owner occupied homes (housing “service” it provides)
Exceptions: Used goods, Assets (stocks, bonds, land), newly constructed homes
Intermediate & Final Good
Intermediate– Used in producing final good, counted in GDP included in the value of the final good.
Final Good– Sold to its final user, their value is included in GDP
Private Investment (I) What is it? What is included and excluded?
Part of GDP that is purchased by business firms as final users. 3 parts.
- Business Purchases of Plant, Equipment and Software. Not used up in production (bang on head)
- Changes in Inventory
- New-Home Construction
Excluded: Government Investment, Consumer Durables (Things that get used up), Human Capital (your actual skills)
Ignores Depreciation
Inv 2. Changes in Inventory
Changes in Inventory affect GDP because production never =’s sales. One is always more than the other and the difference is the change in GDP.
Sale>Prod. Sold more than Produced LOWERS GDP —-Prod. 50 Sold 100= -50 from last year
Sale<Prod. Produced more than sold RAISES GDP
—– Prod 200 Sold 100= +100 new & not sold
Government Purchases (G) Whats is excluded?
Spending by federal, state and local governments on goods (jets) and services (police, government).
Excluded: Transfer Payments- Money xferred from taxpayers to the poor, unemployed etc..
Net Exports (NX)
Total Exports- Total Imports= Net Exports
Im: Goods/Services not prod in the US.
Ex:Goods/Services prod in US
Government Purchases (G) Whats is excluded?
Spending by federal, state and local governments on goods (jets) and services (police, government).
Excluded: Transfer Payments- Money xferred from taxpayers to the poor, unemployed etc..
Net Exports (NX)
Total Exports- Total Imports= Net Exports
Im: Goods/Services not prod in the US.
Ex:Goods/Services prod in US
Which government agency reports on unemployment and how often?
How do you calc. unemployment rate?
How do you qualify as unemployed and what are the 4 types?
Bureau of Labor Statistics- Every Month, 60K Households; includes all 4 types of Unemployment.
Unemployment Rate=
–Unemployed/Labor Force (employed and not)
Must be: 1. Not Working and 2. Actively seeking a job.
Four types of Unemployment: Frictional, Seasonal, Structural, Cyclical-> (macro)
Which government agency reports on GDP and how often?
U.S. Department of Commerce:: Bureau of Economic Analysis– Every 3 Months
Which government agency reports on unemployment and how often?
Bureau of Labor Statistics- Every Month
Unemployment Rate=
–Unemployed/Labor Force (employed and not)
Must be: 1. Not Working and 2. Actively seeking a job.
Four types of Unemployment: Frictional, Seasonal, Structural, Cyclical-> (macro)
Frictional Unemployment
Short Term– People between Jobs, entering or re-entering labor market
Micro-economic Condition
Cyclical Unemployment
Macro- Economic Problem! Arises from change in overall production of the economy over the business cycles.
Relationship between the Economy’s Production and Unemployment.
Prod Falls– More Unemployment
