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
Core inflation excludes
Most volatile CPI components (fruitsAnd vegetables, gasoline, fuel, national guard, mortgage interest costs, tobacco products)
Nominal interest rates
The stated interest rate on the loan
Real interest rate
The nominal interest rate adjusted for the effects of inflation
Labour force participation rate
Percentage of population over 15 that is in the labour force
Unemployment rate =
Number of unemployed ÷ labour force
Unemployed
If a person did not work in a previous week but was available & has actively been looking for work for the past 4 weeks
