Chp20 - GDP Flashcards
0
Q
Chained-dollar real GDP
A
- a measure of real GDP; measure relative to a base year (e.g. 2012 GDP as expressed in 2002 dollar)
- Done by
1) Value production in the prices of adjacent years
2) Find the average of two percentage changes
3) Link to the base year
1
Q
Business Cycle
A
- Periodic, but irregular fluctuation of of total production and other measures of economic activity
- Characterized by: Expansion & Recession
- Has two ‘turning-points’: Peak & Trough
2
Q
Cycle
A
- Where a variable tends to alternate between upward and downward movements
3
Q
Consumption Expenditure
A
- The total payment for consumer goods and services (c)
- the expenditure by households on goods and services produced in Canada and in the rest of the world
4
Q
Depreciation
A
- The decrease in the value of a firm’s capital that results from wear and tear, and obsolescence
5
Q
Expansion
A
- period in which real GDP increases
- part of the ‘business cycle’ occurring from trough to peak
6
Q
Exports
A
- Where a country sells goods and services to the rest of the world
7
Q
Final Good
A
- A good or service bought by a final consumer (e.g. Ford truck)
- Can either be consumption good or capital good
- Consumption good - bought by final user for consumption
- Capital good - bought by firm for use to provide further g&s
8
Q
Government Expenditure
A
- where government buys goods & services
9
Q
Gross Domestic Product (GDP)
A
- the market value of the final goods and services produced within a country within a given time period
10
Q
Gross Investment
A
- The total amount spent on both buying new capital and replacing depreciated capital
11
Q
Imports
A
- Goods & Services bought by a given country from the rest of the world
12
Q
Intermediate Good
A
- good or service bought in order to create another good or service (e.g. the tires bought to be put on a brand new truck)
13
Q
Net Exports
A
- The value of exports (X) - the value of imports (m)
- if positive: the net flow is from given country to the rest of the world
- if negative: the net flow is from rest of the world to given country
14
Q
Investment
A
- The purchase of new plant, equipment, and buildings, and additions to inventories by firms
15
Q
Net Investment
A
The amount by which the value of capital increases
16
Q
Nominal GDP
A
- The value of final goods and services produced in a given year when valued at the prices of that year
17
Q
Potential GDP
A
- the maximum level of real GDP that can be produced while avoiding shortages of labour, capital, land, and entrepreneurial ability that would bring rising inflation
18
Q
Real GDP
A
- the values of all final goods and services produced in a given year when valued at the prices of a reference base year
- done to compare different years and reveal the changes in production
19
Q
Real GDP per Person
A
- is real GDP divided by the population
- tells us the value of goods and services that the average person can enjoy
- helps control for rising prices and rising cost-of-living
20
Q
Recession
A
- period during which real GDP decreases for at least two successive quarters
- a period of significant decline in total output, income, employment, and trade usually lasting 6mons-1year, and marked by contractions in many sectors of the economy
- part of business cycle; takes place between peak and trough
21
Q
Time-Series Graph
A
- graph that measures time on the x-axis and the variable of interest on the y-axis
22
Q
Trend
A
- tendency for a variable to move in a particular direction
23
Q
Calculating GDP: Expenditure Approach
A
- measures GDP as the sum of consumption expenditure
- Requires
- Consumption Expenditure (C)
- Investment (I)
- Gov. expenditure on goods & services
- net exports of goods and services (X - M)
