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Macroeconomics > Chapter 6 - Introduction to Macroeconomics and GDP > Flashcards

Chapter 6 - Introduction to Macroeconomics and GDP Flashcards

1
Q

What is the study of the economy of an entire nation or society?

A

Macroeconomics

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2
Q

What is the study of individual people, firms, and industries?

A

Microeconomics

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3
Q

What do economists measure in order to figure out what the overall health of the economy is?

A

The total output of an economy

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4
Q

Why do we cover output and input together?

A

They are essentially the same thing

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5
Q

What is the market value of all final good and services produced within a nation during a specific time period?

A

Gross Domestic Product (GDP)

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6
Q

What is the typical time period of GDP?

A

A year

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7
Q

Why is GDP useful to examine?

A
  1. It can estimate living standards across time and nations
  2. It measures economic growth
  3. It can determine whether an economy is experiencing a short-run expansion or recession
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8
Q

What is the per capita GDP?

A

The GDP per person

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9
Q

How do you find the per capita GDP?

A

Divide the GDP by the population

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10
Q

Why do prices of goods and services almost always rise over time?

A

Inflation

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11
Q

What is the growth of the overall level of prices in the economy?

A

Inflation

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12
Q

What is GDP adjusted for changes in prices over time called?

A

Real GDP

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13
Q

What is Economic growth measured as?

A

The percentage change in real per capita GDP

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14
Q

What are short-term economic downturns?

A

Recessions

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15
Q

What are short-run fluctuations in economic activity?

A

Business cycles

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16
Q

What two phases do the peaks and troughs divide the business cycle into?

A
  1. Expansion

2. Contraction

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17
Q

When does an economic expansion occur?

A

From the bottom of the trough to the next peak

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18
Q

When does n economic contraction occur?

A

From the peak downward to the trough

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19
Q

What is used to determine whether an economy is expanding or contracting in the short run?

A

GDP

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20
Q

Economists use what to add corn and cars and the other goods and services in GDP?

A

Market values

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21
Q

How do you find the market value of one good, what about multiple goods?

A
  1. You take the quantity and times it by the price

2. You add the market values of everything together

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22
Q

Does the majority of the U.S GDP come from goods or services?

A

Services

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23
Q

What are outputs that provide benefits without the production of tangible products?

A

Services

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24
Q

Does all the spending involved in building a single good count towards GDP?

A

No

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25
Q

What are goods that are repackaged or bundled with other good for a later sale?

A

Intermediate goods

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26
Q

What are goods that are sold to final users?

A

Final goods

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27
Q

Does GDP only include goods and services that are produced domestically?

A

Yes

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28
Q

What is the output produced by workers and resources owned by residents of the nation?

A

Gross national product (GNP)

29
Q

Do sales of financial assets such as stocks and bonds count toward GDP?

A

No

30
Q

What process does the BEA use to tally GDP data?

A

The national income accounting

31
Q

What are the four major categories that GDP is broken up into?

A
  1. Consumption
  2. Investment
  3. Government purchases
  4. Net exports
32
Q

Which government agency is in charge of tallying GDP data?

A

The Bureau of Economic Analysis (BEA)

33
Q

What is the largest component in GDP?

A

Consumption

34
Q

What is the purchase of final goods and services by households?

A

Consumption

35
Q

Does consumption include of buying new houses?

A

No

36
Q

What are the two categories that consumption is divided into?

A
  1. Durable goods

2. Non-durable goods

37
Q

Which consumption goods are consumed over a short period?

A

Non-durable goods

38
Q

Which consumption goods are consumed over a long period?

A

Durable goods

39
Q

What refers to private spending on tools, plant, and equipment used to produce future output?

A

Investment

40
Q

What includes spending by all levels of government on final goods and services?

A

Government purchases

41
Q

Are transfer payments (welfare payments or unemployment insurance) included in government purchases?

A

No

42
Q

What’s the equation to find net exports?

A

Exports - imports

43
Q

Do we count imports in our GDP?

A

No

44
Q

What is the GDP calculated from current prices called?

A

Nominal GDP

45
Q

What is an index of the average prices of goods and services throughout the economy?

A

Price level

46
Q

What is the price level index that includes prices of final goods and services in GDP?

A

GDP deflator

47
Q

Is real GDP adjusted for inflation?

A

Yes

48
Q

What is it when our nominal GDP is equal to our real GDP?

A

Base year

49
Q

What number should the price level be in a base year?

A

100

50
Q

How do you convert nominal GDP into real GDP?

A

(Nominal GDP / Price level) x 100

51
Q

What are calculated as percentage changes in a variable?

A

Growth rates

52
Q

What are the steps to finding the growth rate?

A
  1. value - (value -1)
  2. / by value - 1
  3. x 100
53
Q

What is nominal GDP equal to?

A

Real GDP + price level

54
Q

What was the rate of growth of real GDP in Mexico in 2010?
Nominal GDP = 18
Price level growth rate = 4.4

A

13.6

55
Q

What is the single most important indicator of macroeconomic performance?

A

GDP

56
Q

Why do economists stress real GDP rather than nominal GDP when looking at GDP changes over time?

A

Real GDP takes inflation into consideration

57
Q

What are the four shortcomings of GDP?

A
  1. Non-market goods
  2. Underground Economy
  3. Quality of the Environment
  4. Leisure time
58
Q

What are goods and services produced, but not sold?

A

Nonmarket goods

59
Q

Which shortcomings of GDP include uncompensated household activities?

A

Nonmarket goods

60
Q

Which shortcoming of GDP is washing the dishes an example of?

A

Nonmarket goods

61
Q

Which shortcoming of GDP is babysitting an example of?

A

Underground economy

62
Q

What shortcoming of GDP is prostitution an example of?

A

Underground economy

63
Q

What includes transactions that are not reported to the government, and therefore not taxed?

A

The underground economy

64
Q

Does the underground economy only include illegal transactions?

A

No

65
Q

What’s an example of a legal underground economy transaction?

A

Waitress tips

66
Q

Does the U.S. have a small or large underground(shadow) economy?

A

Small

67
Q

How is macroeconomics different from microeconomics?

A

Microeconomics is the study of individuals and firms, but macroeconomics considers the entire economy

68
Q

Does GDP measure both output and income?

A

Yes

Macroeconomics (9 decks)

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