Chapter 9: GDP Flashcards
what are the 3 ways to measure GDP
total income
total spending
total output
what is gdp
the market value of all final goods and services produced within a country within a year
why does gpd not separately include intermediate goods and services
because it is already counted for in the cost of the final product
does resale products count to gdp
no
if the material is made in Canada but by a foreign-owned business does it count to Canadian GDP
yes
if the material is made in Canada but sold to other countries does it count to Canadian GDP
yes
if the material is made in Canadian-owned factories in other countries does it count to Canadian GDP
no
if the material is made outside Canada and then shipped to Canadians does it count to Canadian GDP
no
if a product is created does it count to gpd the year its created or the year it is sold
created
when measuring GDP by tracking total spending you can track where this money is going
what is the equation to categorize the type of spending
Y = C + I + G +NX
Y = GDP
C = consumption
I = Investment
G = Gov’t purchases
NX = Net Export
C = consumption
I = Investment
G = Gov’t purchases
NX = Net Export
of the 5 spending types describe them
consumption: anything a household buys, even long-lasting goods (cars), rent counts too
investment: spending on new capital assets that increase the economy’s productive capacity
*building a factory,
* office supplies if you use it to produce more work
* money spent on R&D,
* new inventory created is counted as an investment, because they lead to future sales
* * investing is not, buying stocks, investing with a bank)(buying newly built home is investment) (buying old home is not)
Gov’t purchases: whatever gov’t buys (does not count transfer payments, transferring money from gov’t to ppl, no good produced)
NX: GDP adds exports and subtracts import (exports count to GDP, imports do not)
when considering GDP as total output, what does the term value added refer to
the amount by which your company increases the value of an item. it measures you contribution toward producing that item
why is measuring GDP as total income important, what insight does it provide
you can assess the material living standards in a country
when measuring GDP as total income what two sums are equal
the sum of total wages and total profits
does capital gain (ex. if you sell your house for a higher than you bought it for) count to gdp
no, nothing new is created, it is a resale
