Chapter 4: GDP Flashcards
Microeconomics
The study of how households and firms make choices, how they interact in markets, and how the government attempts to influence their choices
macroeconomics
the study of the economy as a whole, including topics such as inflation, unemployment, and economic growth
Business cycle
Alternating periods of economic expansion and economic recession
Expansion
The period of a business cycle during which the total production and total employment are increasing.
Recession
The period of a business cycle during which total production and total employment are decreasing.
Economic growth
The ability of an economy to produce increasing quantities of goods and services.
Inflation rate
The percentage increase in the price level from one year to the next. -> over some period
Gross domestic product (GDP):
The market value of all final goods and services produced in a country during a period of time, typically one year.
Final good or service
a good or service purchased by a final user. These are what are used to calculate GDP.
Compensation of Employees
all the benefits workers receive from providing their labour to firms
Gross Operating Surplus
payments to owners of the capital used by firms and government
Net Operating Surplus:
payments to owners of capital over and above compensation for capital that wore out
Capital Consumption
payments to the owners for capital that wore out
Gross Mixed Income
income generated by small businesses for their owners
Consumption of Fixed Capital
the depreciation of the capital used by small businesses
Net Mixed Income
the payment to owners of small businesses over and above the compensation for depreciation of capital owned by the business
Taxes Less Subsidies
payment to government that mimics income received by the owners of other inputs
Final Consumption
all domestic purchases of goods and services by their final users. Goods that will be used to satisfy needs and wants
Gross Fixed Capital Formation
the purchase of fixed assets (capital) by firms, governments, and households
Investment in Inventories
spending on finished products kept on hand to sell
Net Exports
value of exports minus the value of imports
Exports
goods and services produced in Canada and sold to foreign firms, governments, and households
Imports
goods and services produced in other countries and bought by Canadian firms, governments, and households
Statistical Discrepancy
an accounting item that ensures that the income and expenditure approach yield the same result
