GDP

Question 1

What is macroeconomics

Answer 1

the study of the economy as a whole

Question 2

what does fiscal refer to

Answer 2

the government taxes and spending

Question 3

what is a stock value

Answer 3

a measure that captures a quantity at a given time eg amount of moeny in a current account

Question 4

what is a flow value

Answer 4

a measure that captures quantity over a period of time eg monthly paycheck

Question 5

what are the two things that GDP represents

Answer 5

countries total income and total expenditure, these are the same

Question 6

why is total income and total expenditure the same

Answer 6

beacuse every earning of someone is spending of another

Question 7

Define GDP

Answer 7

market value of all final gooods and services produced within a given country in a given period of time

Question 8

what does GDP stand for

Answer 8

gross domestic product

Question 9

what is the difference between GDP and GNP

Answer 9

GDP is what is produced within the physical borders of the country, GNP is what is produced by a countries nationals

Question 10

what does market value mean

Answer 10

what people pay for it

Question 11

what does a final good mean

Answer 11

not intermediate goods eg IPhones not screens, buttons

Question 12

why does it only count final good

Answer 12

to avoid double counting

Question 13

does GDP count resale of goods? eg buying a second hand car

Answer 13

no only new selling goods

Question 14

if an intermediate good isn’t made into a final good by the end of the year when GDP is calculated, is it counted

Answer 14

yes and taken away from price of final good next year

Question 15

is Irelands GDP or GNP bigger? why?

Answer 15

GDP as ireland has many MNCs opertaing here

Question 16

define GNP

Answer 16

the value of all income earned by a given nation’s residents over a period of time, regardless of where it is earned

Question 17

what are the four components of GDP

Answer 17

Consumption
Investment
Government spending
Net Exports

Question 18

what does consumption include

Answer 18

any spending on final goods by households

Question 19

what does investment include

Answer 19

firm spending on capital and equipment

newly built houses

Question 20

what does government spending include

Answer 20

sum of all goods and services purchased by the government eg hospitals, vaccines, education

Question 21

what does government spending not include when counting GDP

Answer 21

Transfer payments including social welfare payments (purchases which arent made in order to get tangible goods in return)

Question 22

how to calculate net exports

Answer 22

all exports - all imports

Question 23

what additional component is needed to calculate GNP

Answer 23

net factor income from abroad

Question 24

what is the difference between real and nominal GDP

Answer 24

real gdp is measured using a fixed base price from some year

nominal gdp is measured using the current value of the goods

Question 25

which grows faster generally Nominal GDP orreal GDP

Answer 25

nominal

Question 26

what does the GDP deflator measure

Answer 26

how much prices are changing

Question 27

how to calculate the GDP deflator

Answer 27

nominal GDP/ Real GDP

Question 28

What does GNI stan dfor

Answer 28

gross national income

Question 29

what is GNI equal to

Answer 29

GNP

Question 30

Some limits related to GDP

Answer 30

Accounting for illegal activities? value of leisure time and those who unpiad work at home? value of public goods potential raise in GDP after wars/disasters eg new buildings after earthquake will show a growth some bad things are produced eg pollution says nothing about distribution of wealth is money == happiness

Question 31

alternatives to measuring wellbeing rather than GDP

Answer 31

human development index happy planet index (life expectancy, % in 3rd lvl edu, equality, sanitation facilities, nutrition, employment)

Question 32

benefits of GDP

Answer 32

Easy to compute reliable everyone has dofferetn benchmarks for happiness

Question 33

Is nominal or real GDP better at showing growing ecoomies

Answer 33

real, not affected by inflation

Question 34

if a jump in prices was due to tech development, is real or nominal gdp a better measure of growth

Answer 34

nominal | its not inflation but a perm price change

Question 35

what is rule of 70

Answer 35

if some varibale grows at x% per year, then that variable doubles in approx 70/x years

Question 36

why do governments invest in education to encourage growth

Answer 36

investment in human capital is likely to lead to developments in technology which in turn increase efficiency and productivity

Question 37

what is gross investment

Answer 37

the total spending on capital stock per period in a country

Question 38

what is net investment

Answer 38

spending on capital stock taking into account spending on deprication of the existing capital stock

Question 39

define productivity

Answer 39

quantity of goods and services that a worker can produce in a specific period

Question 40

what is human capital

Answer 40

knowledge and skills

Question 41

what is technological knowledge

Answer 41

societies understanding on how the world works and the best wya to produce goods and services(quality of human and physical capital)

Question 42

do natural resources limit our possible growth?

Answer 42

will the fixed supply of limited natural resources eventyually run out? technology imporvements have allowed less natural resourcesto be used eg cars now use way less petrol than before scarcity is reflected in market prices and rn, prices of natural resources arent extremelt high meaning they are not scarce

Question 43

why do governments want to encourage investment by firms

Answer 43

the correlations between investment and growth is strong meaning the standard of living in the country can improve

Question 44

what is the catch up effect

Answer 44

when the economy has a low level of capital an extra unit of capital leads to a large increase in output eg changing from traditional farming methods to machinary. This is so these low capital countries can catch up to the high capital countries in the countries with high level of output already, each new until of capital will result in a small increase in output

Question 45

Explain why an economy’s income must equal its | expenditure.

Answer 45

every spending of one person in an economy is the earnings of another and vice versa

Question 46

Many years ago, Jamanda paid €500 to put together a record collection. Today she sold her albums at a car boot sale for €100. How does this sale affect current GDP?

Answer 46

it wont because GDP only accounts for the sale of new goods