Class Chapt 5 & 6 Flashcards
What does GDP stands for?
Gross Domestic Product
When was the The Global Financial Crisis and the grate depression?
2008 to 2009 and 1929 to 1933.
Income is determined by Input markets or by output markets?
Input markets.
What does macroeconomics focuses on?
connections between input and output markets
How is it called the Interest rate controlled by the Bank of Canada
Over night loan rate or fed rate
_________ is when market outcomes are inefficient or inequitable and fail to serve the public interest
Market failure
_____________ is when government policy fails to serve the public interest
Government failure
a) The political right = Markets Self-Adjust = government hands-off.
b) The political left = Markets Fail Often =
Government hands-on
What are the 3 key performance outcomes of the Canadian economy?
- GDP
- Unemployment
- Inflation
What are the five macroeconomic players?
-Consumers, -Businesses, -Government,
-Bank of Canada
-The banking system,
What is the fundamental macroeconomic question?
If left alone by government, do the price mechanisms of market economies adjust quickly to maintain steady growth in living standards, full employment, and stable prices?”
What is the Gross Domestic Product
is the market value of all final goods and services produced in a country in a given time period.
How do we measure the standard of living?
GDP per person
how do we calculate the Value added by a firm?
Te firms production minus the value of the intermediate goods it buys from other firms
Government financial transfers are part of the circular flow of expenditure and income. True or False?
False. only when the government expends in goods or services is when the circular flow activates.
How do you calculate net exports?
Export (X) - Imports (M)
What is the equation to calculate the GDP?
Y= C+I+G+X-M
Explain the GDP Equation:
C = Consumer expenditure, total payment for consumers goods and cervices.
I = Investment, purchase of new plant, equipment, inventories and buildings.
G = Government expenditure in goods and services.
X = Exports
M =Imports
What does Gross means in GDP?
Gross means that Inflation has not been considered.
What are the 2 approaches to measure the GDP?
The expenditure and the Income approach.
What does the expenditure approach includes?
- Consumer expenditure
- Investment
- Government expenditure on goods and services.
- Net exports (X-M)
What does the Income approach includes?
1 .Net domestic income at factor cost.(Wages, +Salaries + supplementary income + other factor incomes)
2. Net domestic income at market prices.( NDI at factor cost + [Indirect taxes - subsidies.]
3. + Depreciation
What is the difference between real GDP and nominal GDP?
Real GDP includes inflation.
What are the factors that influence the standard of living and that are not part of GDP?
- Household production
- Underground economic activity
- Health and life expectancy
- Leisure time
- Environmental quality
6.Political freedom and social justice
How to measure standard of living?
Real GDP per person
There is government failure when:
A) policymakers are captured by special interest groups.
B) policymakers make mistakes based on poor information.
C) government policy fails to serves the public interest.
D) lobbying and political pressure cause government to act for special interest groups
E) all of the above.
E) all of the above.
The underground economy is any economic activity that?
is hidden to avoid taxes and regulations because it is illegal.
