Chapter 9 Flashcards

1
Q

Final Goods

A

Those sold to a final user

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2
Q

Intermediate Goods

A

Those not sold to a final user

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3
Q

Gross Domestic Product (GDP)

A

Current market value of all final goods and services produced within country’s borders in one year (How big an economy is)

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4
Q

Transfer Payments

A

Taking from one person and giving to another, but not in return for any good or service (social security, unemployment insurance, and food stamps)

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5
Q

Bads

A

Unwanted phenomena such as disease, crime, and garbage

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6
Q

Keynesians says bad may increase GDP because…

A

we pay to lessen their effects (such as hiring policemen to combat new crime wave)

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7
Q

The Expenditure Approach

A

Add up current market values of all final goods and services

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8
Q

Income Approach

A

Adds up all payments to factors of production (wages, interest, rent, and profits generated by production)

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9
Q

Income =

A

Output

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10
Q

Consumption

A

Spending by consumers on nondurable goods, durable goods, and services

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11
Q

Investment

A

Spending by business on capital, changes in business inventories, and spending on new residential housing

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12
Q

Government Purchases

A

Spending by all levels of gvt on goods and services

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13
Q

Net Exports

A

Exports-imports

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14
Q

Government purchases is

A

second largest component

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15
Q

In calculating GDP

A

we use current market prices

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16
Q

Real GDP

A

What GDP would be if prices had remained the same as they were in the base year

17
Q

Real GDP only reflects

A

quantity changes, not price changes

18
Q

To see how well economy is doing, we use

A

real GDP to remove effects of inflation and only look at number of goods and services we are producing.

19
Q

Economic Growth

A

percentage change in real GDP

20
Q

Recession

A

Two successive quarters (3 month periods) of negative economic growth

21
Q

Business Cycle

A

Describes ups and downs of the economy

22
Q

Expansion

A

Increase in real GDP

23
Q

at PEAK of business cycle,

A

real GDP is at temporary high

24
Q

when real GDP falls,

A

economy is suffering a CONTRACTION

25
Q

Trough

A

real GDP is at temporary low

26
Q

as real GDP grows from trough,

A

RECOVERY is occurring

27
Q

Per Capita GDP

A

GDP divided by the population; illustrates wellbeing of ppl in an economy

28
Q

Best measure available, but not perfect

A

per capita gdp

29
Q

In evaluating measure of economic health,

A

level of economic achievement and economic growth must be considered.

30
Q

economic growth is related to

A

change in economic freedom