Chapter 5: National and International Accounts: Income, Wealth, and the Balance of Payments Flashcards

1
Q

National Income and Product Accounts

A

Where a closed economy measures and records economic activity

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2
Q

Balance of Payments Accounts

A

Where an open economy measures and records economic activity

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3
Q

Gross National Expenditure (GNE)

A

Total expenditure on final goods and services by home entities in any given period of measurement, made up of three parts: personal consumption (C), investment (I), and government spending (G).
GNE = C + I + G
GNE is an expenditure measure

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4
Q

Gross Domestic Product (GDP)

A

The value of all (intermediate and final) goods and services produced as output by firms, minus the value of all goods and services purchased as inputs by firms.
GDP = C + I + G + TB
In a closed economy, GDP = GNE because TB = 0

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5
Q

Gross National Income (GNI)

A

Total income resources of the economy

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6
Q

Trade Balance (TB)

A

The difference between payments made for imports and payments received for exports.

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7
Q

Net Factor Income from Abroad (NFIA)

A

Value of factor service exports minus factor service imports

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8
Q

Net Unilateral Transfers (NUT)

A

The value of unilateral transfers the country receives from the rest of the world minus those it gives to the rest of the world

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9
Q

Gross National Disposable Income (GNDI)

A

Total income resources available to the home country

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10
Q

Current Account (CA)

A

Tally of all international transactions in goods, services, and income

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11
Q

Financial Account (FA)

A

Value of asset exports minus asset imports

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12
Q

Capital Account (KA)

A

Value of capital transfers from the rest of the world minus those to the rest of the world

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13
Q

National Income Identity

A

Y = C + I + G + CA

Tells us that the current account represents the difference between national income Y and GNE

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14
Q

Current Account Identity

A

S =Y - C - G = I + CA

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15
Q

Government (Public) Saving

A

Difference between tax revenue T received by the government and government purchases G

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16
Q

External Asset

A

A claim on a foreign country

17
Q

External Liability

A

A foreign country’s claim on you

18
Q

BOP Identity

A

CA + FA + KA = 0

It does actually balance

19
Q

BOP Credit

A

Six types of transactions are payment credits:

For the Current Account:

  1. Exports of goods and services (+EX)
  2. Exports of factor services (+EX(fs))
  3. Unilateral transfers received (+UT(in))

For the Capital Account:
4. Capital transfers received (+KA(in))

For the Financial Account:
5,6. Exports of home and foreign assets (+EX(ha), +EX(fa))

20
Q

BOP Debit

A

Six types of transactions are payment debits:

For the Current Account:

  1. Imports of goods and services (-IM)
  2. Imports of factor services (-IM(fs))
  3. Unilateral transfers given (-UT(out))

For the Capital Account:
4. Capital transfers given (-KA(out))

For the Financial Account:
5,6. Imports of home and foreign assets (-IM(ha), -IM(fa))

21
Q

Net Lender

A

A country that has a current account surplus

22
Q

Net Borrower

A

A country that has a current account deficit

23
Q

Net Creditor

A

A country whose external assets exceed its external liabilities

24
Q

Net Debtor

A

A country whose external liabilities exceed its external assets

25
Q

External Wealth

A

The value of total external assets minus the value of total external liabilities