Macro Flashcards
Microeconomics focuses on ??
the individual agent
ex Households, workers, businesses
Macroeconomics focuses on the ??
the economy as a
whole
Big issues: like Gross domestic product (GDP), unemployment,
inflation, government deficits, export/import levels
Gross domestic product (GDP) ??
- value of all final goods and services produced within a country in a
given year - does not include
intermediate goods
GDP Equation: ?
GDP = C + I + G + (NX)
what does c mean in the GDP equation??
Consumption is C in the GDP equation and represents consumer
expenditures
Consumer expenditures account for about ??
two-thirds of US GDP
Durable goods goods that typically last ??
at least two to three years such
as cars and appliances
Nondurable goods ??
consumable goods such as food and clothing
are New home purchases included in consumption??
NO
are Services is the largest category within consumer expenditures??
True
Investment expenditure (I)
purchases of equipment and buildings, usually by
businesses
What does business Capital include?
business structures, equipment, and intellectual property products
what does residential capital include?
landlord’s apartment building; a homeowner’s personal
residence
Investment expenditure typically accounts for how much %?
bout 15-18% of US GDP
Government expenditure accounts for about ?%
20% of US GDP
What does government expenditure include?
Includes infrastructure, defense, education, etc Includes federal, state, and local government expenditures
Are transfer payments in GdP?
NO
What are transfer payments?
Transfer payments unemployment benefits, veteran’s benefits & SS;
**though this is a category of government spending, it is not included in
GDP*
What are net exports?
Net exports = exports – imports
Equation for net exports is NX = X – M
Net exports are also referred to as ?
Trade balance
Trade deficit
Trade deficit imports exceed exports
Trade surplus
Trade surplus exports exceed imports
Exports spending on
domestically produced goods by foreigners
imports spend on
Imports spending on foreign goods by domestic residents
nominal gDP is ?
Nominal GDP the production of goods and services valued at current prices
real gdp is
Real GDP the production of goods and services valued at constant prices
Gdp deflator is
GDP deflator measures the current level of prices relative to the level of prices
in the base year
inflation is
Inflation increase in overall price level in the entire economy
inflation rate
Inflation rate percentage change in some measure of the price level from one
period to the next
What happens during a recession?
Recession two consecutive quarters of falling GDP
Real GDP declines
Lower income
Rising unemployment
Falling profits
Increased bankruptcies
Depression how long does it last?
Depression severe and long-term recession; no agreed-upon minimum
amount of time for this; typically lasts years
what does GDP is useful in measuring economic well-being??/
- Measures economy’s total income
Measures economy’s total expenditures
Measures our ability to obtain many of the inputs into a worthwhile life
What GDP doesn’t include what?
- Leisure time
More productive work hours
Actual levels of environmental cleanliness, health, and learning
Whether air/water is cleaner or dirtier
Increase/decrease in life expectancy or infant mortality
Literacy rates
Under the table payments
Levels of inequality in society
What technology and products are available
rich countries tend to have what?
- higher GDP per person
Better life expectancy
Higher literacy rates
Higher rates of education
Better nutrition
Poor countries tend to have what?
Poor countries lower GDP per person
Worse life expectancy
Lower literacy rates
Lower rates of education
High rates of malnutrition
Lower birth rates
Higher rates of infant and maternal mortality
