Macro 2 Flashcards
What is national income ?
The measure of the total value of a country’s final output of all new goods and services
What is nominal income ?
Measures the income at current prices with no adjustment for the effects of inflation
What is real income ?
The measure of income at a constant price and has been adjusted for inflation
What are leakages ?
When income leaves the circular flow
Why do leakages happen ?
When a household saves (S)
When goods and services are imported (M)
When govt imposes taxes households and firms (T)
What are injections ?
When income enters the circular flow of income
Why do injections happen ?
When a govt spends (G)
When goods and services are exported (x)
When firms invest to expand their business (I)
What is GDP?
GDP is the measure of economic growth
How to calculate GDP
GDP= C+I+G+(X-M)
Gross domestic products = consumer spendings + investment + govt spending + (export - imports )
What is GNI?
Gross national income
What is GNP ?
Gross national product
Total output of citizens
What is CPI ?
Consumer price index measures the rate of inflation in the uk
What’s a boom ?
A period of high economic activity
GDP growth
Low unemployment
High capital investment
What’s a slump ?
A period of serious economic decline
Low or negative gdp growth
Low levels of inflation
High unemployment
Fall in capital investment
What is a recovery
A period following a slump where there are signs of growth
Rising gdp
Inflation starts to rise
Falling unemployed
Increasing capital investment
