Chapter 5 – Measuring The Economy's Output Flashcards
GDP
The total market value of all final goods and services produced annually within the boundaries of Canada.
National income accounting
The techniques used to measure the overall production of the economy and other related variables for the nation as a whole.
Intermediate goods
Products purchased for resale or further processing or manufacturing.
Final goods
Goods and services purchased for final used and not for resale or further processing or manufacturing.
Multiple counting
Wrongly including the value of intermediate goods in the GDP.
Value added
The value of the product sold by a firm, less the value of the product purchased and used by the firm to produce the product.
Expenditures approach
The method to measure GDP that adds up all the expenditures made for final goods and services.
Income approach
The method to measure GDP that adds up all the income generated by the production of final goods and services.
Personal consumption expenditures
The expenditures of household for durable and nondurable consumer goods and services.
Durable goods
Product with expected lives of three years or more.
Nondurable goods
Product with expected lives of less than three years.
Services
The work done by service providers.
Gross investment
Expenditures for newly produced capital goods such as machinery, equipment, tools, and buildings, and for additions to inventories.
Noninvestment transaction
An expenditure for stocks, bonds, or secondhand capital goods.
Net investment
Gross investment - consumption of fixed capital.
Capital consumption allowance
Estimate of the amount of capital worn-out are used up in producing the GDP; also called depreciation.
Capital shock
The total available capital in the nation.
Government purchases
The expenditures of all government and the economy for final goods and services.
Government Transfer payment
The disbursement of money by government which government receives no currently produced a good or service in return.
Exports
Goods and services produced in a nation and sold to customers in other nations.
Imports
Spending by individuals, friends, and government for goods and services produced in foreign nations.
Net exports
Exports minus imports.
National income
Total income earned by resource suppliers for the contributions to gross national product; equal to the GDP minus non income charges, minus net foreign factor in town.
Corporate income tax
A tax levied on the net income of corporations.
Undistributed corporate profits
After-tax corporate profits not distributed as dividends to shareholders; corporate or business savings; also called retained earnings
Interest income
Payments of income to those who supplied the economy with capital.
Indirect taxes
Sales taxes, business property taxes, and customs duties, which firms treat as cost of producing a product.
Sales tax
A tax levied on the cost of a broad group of products.
Consumption of fixed capital
Estimate of the amount of capital worn-out or used up in producing the gross domestic product; also called depreciation.
Personal income or PI
The earned and unearned income available to reserve suppliers and others before the payment of personal income taxes
Personal income tax
The tax levied on the taxable income of individuals, households, and unincorporated firms.
Disposable income or DI
Personal income minus personal taxes.
The value of money
The quantity of goods and services for which a unit of money can be exchanged; the purchasing power of the unit of money; the reciprocal of the price level.
Nominal GDP
GDP measured in terms of the price level at the time of measurement.
Real GDP
Nominal GDP adjusted for inflation.
Price Index
And index number that shows how the weighted average price of the market basket of goods and services changes through time.
Base year
The year with which other years are compared when an index is constructed; for example, the base year for a price index.
Deflating
Finding the real GDP by increasing the dollar value of the GDP for year in which prices were higher than in the base year.
Inflating
Determining real GDP by increasing the dollar value of the nominal GDP in the year in which prices are lower than in the base year.
GDP deflator
An implicit price index calculated by dividing nominal GDP by real GDP and multiplying by 100
