Macro Book 1 Flashcards
National Income, Circular Flow of Income, Gross Domestic Product, Index Numbers, Handling Data, Macro Policy Objectives
What are the three methods of calculating the level of economic activity in an economy
Output
Expenditure
Income
What are the factors of income
Rent
Wages
Interest
Profit
What are leakages
Flows of money leaving the circular flow or not circulating
What are injections
Flows of money entering the circular flow or starting to circulate
Examples of leakages
Purchase of Imports
Taxation
Saving
Examples of injections
Sales of exports
Government Spending
Investment
Circular ____ of ______
Circular flow of income
What is the value of all goods/services produced in an economy in a given time period
Gross Domestic Product (GDP)
Why may it be difficult for GDP to be accurate
Cash in hand may make growths unmeasurable
Tax evasion/Illegal activity
New information is constant
Data can be skewed due to inflation
When is data “real”
When it is adjusted for inflation
When is data “nominal”
When it is the actual value that is measured
How does the output method calculate the level of economic activity in the economy
Adds up the value of all the goods/services produced by firms in the economy
How does the expenditure method calculate the level of economic activity in the economy
Adds together the value of everything brought in an economy
How does the income method calculate the level of economic activity in the economy
Adds up the amount that firms pay households for the factors of production they provide
What is GDP
The value of all the goods and services produced in an economy in a given time period (usually a year)
