Econ Ch 2 Flashcards
3 measures of macroecon. Performance
① GDP ② inflation rate ③ unemployment rate
GDP
Market valve of all final goods & services at specific time in a country
Gross/ domestic/ product
Excluding depreciation / produced in canada / good or service purchased by a final user
Intermediate G or s
G/s that is an input into another g/s like tires on a truck
Gross national product [ GNP ] GDP = GDP + net factor payments
GNP: final G / s produced by residents of a country even if production takes place outside
. Net factor payments: income of foreign factors in CAD minus income of CAD factors abroad
Factors of production
① land ② labour ③ capital
y=c+i+g+ nx
c: consumption → purchase of new goods&services by households
i: investment → spending by firms on new factories, office buildings, machinery,+ inventory additions + household spending on homes
G: gov purchases → Fed, prov, &local gov on g&s
nx: value of all exports minus all imports
Trade deficit
Import > exports → negative export values
Trade surplus
Import < exports → positive export value
When is Trade defect 0
Import = export → net exports is zero
Nominal GDP
Value of final goods & services usingcurrent year prices
Real GDP
Value of final goods & services using base year prices
GDP deflator
= nominal GDP ÷ Real GDP *100
→ used to estimate inflation rates between2 points in time
Inflation rate formula
= current year - previous year ÷ previousyear using GDP deflator # )
CPI consumer price index
Average of the prices of goods & servicespurchased by urban & rural communities using base-year weights
