Economic Measures.Indicators Flashcards
What are two methods to measuring GDP?
Expenditure and income approach
What are the 4 components of GDP in expenditure approach?
Government spending, Investments, Personal Consumption, and Net exports(exports - imports)
What are the components of GDP in income approach?
Income of proprietors, Profits of corporations, Interest(net), Rental income, Adjustments misc. items, Taxes, Employee compensation, and Depreciation
Calculation for Net Domestic Product(NDP)
GDP - Depreciation
What is the market value of final goods & services produced by residents of a country?
Gross National Product(GNP)
Calculation for Disposable Income(DI)
Personal income - personal taxes
Calculation for unemployment rate
(# of unemployed(seeking)) / Total labor force(seeking+employed)) x 100
What type of unemployment results from workers routinely changing jobs or from workers being temporarily laid off?
Frictional unemployment
What type of unemployment occurs when change in technology or doesn’t correspond with skills?
Structural Unemployment
What type of unemployment results from declines in real GDP?
Cyclical unemployment
What is the employment rate that exists when the economy is at its potential output level?
Natural rate of unemployment
What type of employment involves no cyclical unemployment?
Full employment
What is a sustained decrease in the general prices of goods?
Deflation
What is the change in price levels over time?
Consumer Price Index
Calculation of inflation rate
Change in CPI / CPI(last period)
What are the causes of inflation & deflation?
Shifts in the AD or AS curves
What are the factors of demand-pull inflation factors?
Increases in government spending, wealth, money supply, and decreases in taxes
What are the factors of cost-push inflation factors?
Increase in oil prices and nominal wages
What type of assets & liabilities are inversely related to price levels?
Monetary Assets & Liabilities
What type of assets & liabilities are directly related to price levels?
Non-monetary assets & liabilities
What type of curve illustrates trade-off between inflation & unemployment?
Phillips curve
What happens in a budget deficit?
Country spends more than it takes in; Spend more, tax less to stimulate demand
What happens in a budget surplus?
Country spend less, tax more to reduce demand
Calculation for Nominal Interest rate
Real RF(pure time value of money) + Expected inflation rate
What is real interest rate?
Supply/demand for loanable funds “money supply”
Does nominal interest rates and inflation move together?
Yes
What is done in an expansionary phase?
Increase in money supply, Fed purchases government securities
What is done in a restrictive phase?
Decrease in money supply, Fed sells government securities
Is demand for money inversely or directly related to interest rates?
Inversely
