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Economics > Chapter 12: Economic Indicators and Measurements > Flashcards

Chapter 12: Economic Indicators and Measurements Flashcards

1
Q

the market value of all final goods and services produced within a nation in a given time period

A

GDP

gross domestic product

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2
Q

a way of evaluating a country’s economy using statistical measures of its income, spending, and output
(used in macroeconomics)

A

national income accounting

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3
Q

what are the three GDP requirements?

A
  1. must be a final product
  2. must be produced during the time period, regardless of when sold
  3. must be produced within the nation’s borders
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4
Q

what are the 4 sectors of GDP?

A
  1. consumption
  2. investment
  3. government spending (not transfer payments)
  4. net exports (negative number on graph)
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5
Q

what 3 categories are not measured in GDP?

A
  1. non-market activities
  2. underground economy
  3. quality of life
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6
Q

some productive activities outside of economic markets

ex. volunteer work, performing own home repairs

A

non-market activities

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7
Q
  • illegal activities are unreported
  • legal activities paid for in cash not always declared
  • 8-10% of U.S. GDP
    ex. babysitting
A

underground economy

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8
Q
  • countries with high GDPs have high living standards
  • GDP does not show how goods and services are distributed
  • GDP does not show what goods are being made or services offered
A

quality of life

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9
Q

market value of all final goods and services (produced abroad)

A

gross national product (GNP)

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10
Q

GNP minus depreciation f capital stock

A

net national product (NNP)

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11
Q

total income from production of goods and services

A

national income (NI)

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12
Q

income received by all sources

A

personal income (PI)

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13
Q

personal income minus income taxes

- actual income available for consumer spending

A

disposable personal income (DPI)

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14
Q

series of periods of expanding and contracting activity

- measured by increases or decreases in real GDP

A

business cycle

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15
Q

what are the 4 phases of the business cycle?

A
  1. expansion
  2. peak
  3. contraction
  4. trough
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16
Q

period of economic growth - increase in real GDP

  • jobs easier to find, unemployment drops
  • more resources needed to keep up with spending demand
A

stage 1: expansion

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17
Q
  • real GDP is highest

- as prices rise and resources tighten businesses become less profitable

A

stage 2: peak

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18
Q

producers cut back and unemployment increases

A

stage 3: contraction

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19
Q

contraction lasting two or more quarters

A

recession

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20
Q

long period of high unemployment and slow business activity

A

depression

21
Q

stagnation in business activity with inflation in prices

A

stagflation

22
Q

point at which real GDP and unemployment stop declining

A

stage 4: trough

23
Q

total amount of products that might be bought at every level

- includes all goods and services as well as purchases

A

aggregate demand

24
Q

downward sloping
vertical axis: average price of all goods and services
horizontal axis: economy’s total output

A

aggregate demand curve

25
Q

sum of all goods and services that might be provided at every price level

A

aggregate supply

26
Q

almost horizontal when GDP is low
slopes upward as prices increase with rise in real GDP
almost vertical with inflation - no rise in real GDP

A

aggregate supply curve

27
Q

aggregate demand = aggregate supply
(aggregate demand/supply curve intersection)
- increase in aggregate demand shifts AD curve to the right
- decrease in aggregate supply shifts AS curve to the left

A

macroeconomic equilibrium

28
Q

what are the 4 factors that affect the business cycle?

A
  1. decisions made by businesses
  2. changes in interest rates
  3. expectation of consumers
  4. external shocks to the economy
29
Q
  • affects suppliers and related businesses
  • demand slump can lead to decreased production, layoffs - contraction
  • new technology can raise productivity, demand, employment - expansion
A

business decisions

30
Q

rise = borrowing more costly, lower aggregate demand

  • decrease household purchases, business investment in capital goods
  • promote contraction
  • low rates increase home sales - more people quality for mortgage
A

change in interest rates

31
Q

consumer’s ideas on prices, business activity, jobs influence chooses

  • can change aggregate demand
  • confidence consumes more - raises aggregate demand
A

consumer expectations

32
Q

economy influenced by events beyond its control

ex. natural disasters, infrastructure
- conflicts overseas/political decisions made by other countries

A

external issues

33
Q

measures for predicting changes in the business cycle

- helps government and businesses make good choices

A

economic indicators

34
Q

measures that usually change before real GDP

A

leading indicators

35
Q

measures that usually change at the same time as real GDP

A

coincident indicators

36
Q

measures that usually change after real GDP

A

lagging indicators

37
Q

real GDP divided by total population (measure of standard living)
** not quality of life, but standard of living **

A

real GDP per capita

38
Q

what are the 4 factors that influence economic growth?

A
  1. natural resources
  2. human resources
  3. capital
  4. technology and innovation
39
Q 
ability for a country to have access to
- arable land
- water
- forests
- oil
- mineral resources
also need free market and an effective government
A

natural resources

40
Q

size of labor force multiplied by length of work week

A

labor input

41
Q

increase in ratio of capital to labor

- providing more and better equipment to each worker increases production

A

capital deepening

42
Q

efficient use of resources, raise output

  • reduce time needed to complete task
  • improve customer service
  • advances in production lower prices, make capital deepening cheaper
A

technology and innovations

43
Q

amount of output produced from a set amount of inputs

A

productivity

44
Q

amount of goods and services produced by one worker in one hour

A

labor productivity

45
Q

amount produced by a set amount of equipment and materials

A

capital productivity

46
Q

applies to an industry or business sector

  • ratio between economic output, labor, and capital units used
  • data is compiled for major industries, sectors
  • used to estimate productivity of entire economy
A

multifactor productivity

47
Q

what contributes to productivity?

A
  1. quality of life (educated, healthy workforce is more productive)
  2. technological innovation (new technology helps increase output)
  3. energy costs (cheaper power lowers cost of using tools)
  4. financial markets (banks, stock markets flow funds where needed)
48
Q

an economy can grow by…

A
  • increasing quantity of resources, labor, capital, or technology
  • increasing productivity

Economics (10 decks)

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