Chapter 8: Measures of Economic Activity Flashcards
Define National Income account
The total income and spending In the Canadian Economy
Define GDP
Gross domestic production: The total dollar value of all final goods and services produced over some time
What is the GDP Identity
Because spending can be seen as another incomes, GDP expressed as income = GDP expressed as spending
What are the Ways GDP is calculated
income based, spending based, output based
what is calculated in the GDP Income Approach
Wages & Salaries, Income, Interest, Profts, Rent, Taxes, Depreciation
What is calculated in the GDP expenditure approach?
Personal Concumption, Gross investment, Government purchases, Net exports,
(C+I+G+(Exports-imports))
Difference between Final vs Intermediate products
Final products are no longer processed and sold as final cost; intermediate products are processed further or resold. A product can be both Final and intermediate depending on the context
What is excluded from GDP
Buying stocks, second-hand goods, gifting money, interest payments on loans
What is Real GDP
GDP expressed in constant dollars (Dollars adjusted for purchasing power) from a given year
What is Purchasing Power Parity
A factor used to adjust for purchasing power of GDP’s of different countries with different currencies
What are some limitations to GDP
Excludes volunteer work, under the table transactions, can’t account for product quality increases, where money is being funded to (military or education), environment, leisure time
Gross National Income (GNI)
The total income acquired by Canadians both inside and outside the country
Disposable income
Income after taxes that households use to consume or save
