Chapter 7 Flashcards

1
Q

National income and product accounts

“national accounts”

A

Keep track of the flows of money between different sectors of the economy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Consumer spending

A

Household spending on goods and services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Stock

A

A share in the ownership of a company held by a shareholder

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Bond

A

Borrowing in the form of an IOU that pays interest

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Dvidiends

A

profits distributed to shareholders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Government transfers

A

Payments by the government to individuals for which no good or service is provided in return

Ex. Social Security, unemployment insurance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Disposable income

A

Income + government transfers - taxes = d.income

The total amount of household income available to spend on consuption and save

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Private savings

A

Disposable income that is not spent on consumption

Disposable income - Consumer spending

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Financial markets

A

The banking, stock, and bond markets, which channel private savings and foreign lending into investment spending, government borrowing, and foreign borrowing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Gross domestic product

A

The value of all the final goods and services provided

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Government borrowing

A

The total amount of funds borrowed by federal, state, and local governments in the financial markets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Government purchases of goods and services

A

Total expenditures on goods and services by federal, state, and local governments

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Exports

A

Goods and services sold to other countries

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Imports

A

Goods and services purchased from other countries

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Inventories

A

Stocks of goods and raw materials held to facilitate business operations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Investment spending

A

Spending on productive physical capital - such as machinery and construction of buildings, and on changes to inventories

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

final goods and services

A

Goods and services sold to the final, or end, user

18
Q

Intermediate goods and services

A

Goods and services bought from one firm by another firm that are inputs for production of final goods and services

19
Q

Gross Domestic Product (GDP)

A

The total value of all final goods and services produced in the conomy during a given year

20
Q

Aggregate spending

A

The sum of consumer spending, investment spending, government purchases of goods and services, and exports minus imports

=

Total spending on domestically produced final goods and services in the economy

21
Q

Third Way

GDP =

A

Sum the total factor income earned by households from firms in the economy

22
Q

3 ways of GDP calculation

A
  1. Adding up total value of all final goods and services provided
  2. Adding up spending on all domestically produced goods and services
  3. Adding to total factor income earned by households from firms in the economy
23
Q

Value added

A

The value of a producer’s sales minus the value of its purchases of intermediate goods and services

24
Q

Not included in GDP

A

Intermediate goods and services

Inputs

Used goods

Stocks and bonds

Foreign produced goods and services

25
GNP
The total factor income earned by residents of a country excludes: factor income earned by foreigners (profits to foreign investors on american stocks or payments to foreigners working in US) includes: americans who work abroad temporarily and american companies profiting in foreign countries
26
Aggregate output
The economy's total quantity of output of final goods and services
27
Real GDP
The total value of all final goods and services produced in the economy during a given year, calculated using the prices of a selected base year
28
Nominal GDP
The value of all final goods and services produced in the economy during a give year Calculated using the prices current in the year in which the output is produced
29
Chained dollars
The method of calculating changes in real GDP using the average between the growth rate calculated using an early base year and the growth rate calculated using a late base yera
30
GDP per capita
GDP divided by the size of the population The equivalent to the average GDP per person
31
Aggregate price level
A measure of the overall level of prices in the economy
32
Market basket
A hypothetical set of consumer purchases of goods and services
33
Price index
Measures the cost of purchsing a given market basket in a given year, where that cost is normalized so that it is equlal to 100 in the selected base year
34
Inflation rate
The percent change per year in a price index - typically the consumer price index
35
Consumer price index (CPI)
Measures the cost of the market basket of a typical urban American family
36
Price index formula
_Cost of market basket in a given year_ Cost of market basket in base year X 100
37
Inflation rate formula
_Price index in year 2 - Price index in year 1_ Price index in year 1 X 100
38
Producer Price index (PPI)
Measures changes in the prices of goods purchased by producers
39
GDP deflator
100 times the ratio of nominal GDP to real GDP in a given year
40