Chapter 4 Flashcards
inflation rate
the percentage increase in the average level of prices from one year to the next
gross domestic product (GDP)
the market value of all final goods and services in an area over a period of time
final good/service
a good/service that is not used in the production of another
intermediate good/service
a good/service that is used in the production of another
the value of total production is equal to…
the value of total income
factors of production
labour, capital, natural resources, and entrepreneurship
income categories
wages, interest, rent, and profit
transfer payments are…
not included in GDP because it is not exchanged for a good or service
investment
the purchase of machinery, factories, and houses
expenditure approach
tallies the spending on domestically produced goods and services
income approach
tallies the income received by the residents as a result of the production that takes place in the area
compensation components
wages/salaries and social contributions
gross operating surplus
payments made to the owners of capital by firms and government for the use of their capital in producing goods and services
buying intermediate goods for production
net operating surplus
payments made to the owners of capital by firms and government for the use of their capital in producing goods and services
gross operating surplus - depreciation
consumption of capital
basically depreciation
gross mixed income
income generated by small businesses
taxes less subsidies
payments to the government
Final consumption expenditure
domestic purchases of goods and services used to satisfy individual or community needs and wants
buying things you or the group want/need
gross fixed capital formation
the purchase of fixed assets
fixed assets
long term tangible goods with low liquidity
the value-added method
the additional market value a firm gives to an intermediate good
household production
the goods and services a household produces for itself
the informal economy
concealed (illegal) transactions
nominal GDP
summing the current values of goods and services
real GDP
uses the prices of goods and services from a base year (base-year dollars) to calculate
price level
measures the average prices of goods and services in the economy
GDP deflator
Nominal GDP/Real GDP x 100
Gross national income (GNI)
the value of incomes received by Canadians for the use of their factors of production (local or not)
net national income (NNI)
GNI - consumption of fixed capital
