Chapter 6 - GDP Flashcards
1
Q
What is GDP
A
The market value of all goods and services produced within a country in a year.
2
Q
How To Solve GDP
A
Y = C + I +G + NX
- C = Consumption
- I = Investment
- G = Government Purchases
- NX = Net Exports
3
Q
Nominal VS. Real GDP
A
- Nominal GDP values output using current prices.
- Nominal GDP = Current Price x Quantity
- Real GDP values output at constant prices (prices
of a base year) and is corrected for inflation. - Real GDP = Price in Base year x Quantity
4
Q
What is GDP Deflator
A
- A measure of the overall level of prices, used to correct GDP for inflation.
- GDP Deflator = (NGDP/RGDP)x100
5
Q
The change in Nominal GDP reflects both ___ & ___
A
Prices & Quantities
6
Q
The change in Real GDP is the amount that GDP would change if ___ were ___
A
Prices were Constant (if zero inflation)
7
Q
GDP Does Not Value
A
- The quality of the environment (air, water)
- Leisure time
- Non-market activity, such as the child care
a parent provides his or her child at home - Income equality
8
Q
Why do we care about GDP?
A
- Having a large GDP enables a country to afford better schools, a cleaner environment, health care, etc.
- Many indicators of the quality of life are
positively correlated with GDP.
9
Q
GDP is the main indicator of …
A
A countries well being.
10
Q
What is GDP Per Capita
A
- GDP Per Capita = GDP/Population
- Changes in economic growth.
- National Income Per Person.
