Chapter 12 Flashcards
What are two things that Limit measuring GDP as total production?
- Household production
- Underground Econom
Define household production
Goods and services produced by people for themselves in most cases.
i.e a cake, builing a chair or bookshelve, making dinner for the family growing a garden
THese are not included in GDP
What is the underground economy?
Buying or selling concealed goods from the government because the trade is illegal
i.e WEED
How does Leisure fit into GDP
Leisure is promotes well being in a societ.
- Increase in leisure means in better well being but less work
- Vice versa more less leisure creates high GDP and product but worse/less well being
*
- Vice versa more less leisure creates high GDP and product but worse/less well being
How does pollution negatively affect production
GDP does not account pollution and other negative affects of production, Neither does it adjust for cost. Higher production may also create hgiher pollution and this is not good for the over all well beign
How does crime affect GDP?
Crime has a negative affect on GDP (this is obvious). However in the same hand it can increase GDP. Increase in security increases money spent.
Does GDP account for social problems such as divorce rate, depression, and other problems of well being caused by work?
NO
How would one consider the affect of divisibility in GDP?
If there is an increase in GDP naturally it will reflect an increase in G&S produced by a given firm or country.
However, although an increase is depicted this does not account for the distribution of goods and services.
If they are not distributed evenly this may cause a decrease in well being.
What is Nominal GDP?
Nominal GDP is GDP evaluated at current market prices. Therefore, nominal GDP will include all of the changes in market prices that have occurred during the current year due to inflation or deflation.
What is real GDP?
This rrefers to evaluating on base year prices and the sum of them with the current year prices
What is the GDP deflator?
The GDP deflator is a measure of price inflation. It is calculated by dividing nominal GDP by real GDP and then multiplying by 100. NominalGDP is the market value of goods and services produced in an economy, unadjusted for inflation. Real GDP is nominal GDP, adjusted for inflation to reflect changes in real output.
Basically another way to measure average price level of goods and service
What is the equation for the GDP deflator?
Norminal GDP/ Real GDP
What are five ways to measure total income and total production?
the total value of goods produced and services provided by a country during one year, equal to the gross domestic product plus the net income from foreign investments.
What is national gross product?
gross national product (GNP), i.e. the total market value of all final goods and services produced by the factors of production of a country or other polity during a given time period, minus depreciation.
What is net national product?
the total value of goods produced and services provided in a country during one year, after depreciation of capital goods has been allowed for.
