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macro test 2 Flashcards

1
Q

what is GDP?

A

The GDP is the value of all final goods and services produced within a country during a particular year

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2
Q

what are the 6 limitations of GDP

A
  1. Exclusion of non-market transactions from the GDP
  2. Does not account for inequality of income and wealth
  3. GDP rises with each incident of social breakdown (e.g., crime, imprisonment, and divorce)
  4. GDP rises with each environmental disaster, pollution, and repair expenditure
  5. Does not account for the depletion of natural resources.
  6. GDP increases with war expenditures and post-war rebuilding activities.
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3
Q

the human index?

A
  1. Standard of living
  2. Longevity
  3. knowledge or education
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4
Q

what is not included when measuring the GDP?

A
  1. Financial Transactions
  2. transfer of second hand goods
  3. other excluded transactions
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5
Q

when measuring the GDP with the expenditure approach what do we look for?

A
  1. personal consumption
  2. durable or hard goods
  3. nondurable goods or soft goods
  4. services
  5. gross domestic private investment
  6. government purchases
  7. net exports
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6
Q

what are the factors of income approach?

A
  1. labour or employment income
  2. gross corporate profit
  3. farm and unincorporated business income
  4. interest and investment income
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7
Q

what is the formula of the income approach?

A

GDP: NDI + indirect taxes - subsides + depreciation

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8
Q

what is the NDP formula?

A

NDP= NDI + indirect taxes - subsidies

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9
Q

what is the nominal GDP + the formula?

A

Nominal GDP is the value of current output measured in terms of current prices.
formula:
NGDPt = ΣPt x Qt,

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10
Q

what is the real GDP?

A

is the value of current output measured in terms of some base-year constant prices.
formula:
RGDPt = ΣPb x Qt,

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11
Q

what is the potential GDP and actual GDP? and what is the formula for the output gap?

A 
Potential GDP (Y*) measures what the economy could produce if all resources were employed at their normal levels of utilization. This is often called full-employment output.
Actual GDP (Y) is what the economy actually produces.
The output gap measures the difference between actual output and potential output. 
				Output Gap = Y - Y*
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12
Q

what are the three gaps?

A

Recessionary gap
Inflationary gap
Zero Gap

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13
Q

what is employment?

A

employment is the numbers of adults workers 15+ who have a job

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14
Q

what is unemployment?

A

is the number of individuals who are not employed but are actively searching for a job.

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15
Q

what is labour force?

A

is the number of people of age 15+ who are either employed or unemployed

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16
Q

what are the exceptions for labour force?

A

informs, homeworkers, students

17
Q

what is the working age population?

A

is the number of people 15+ who are legally entitled to work

18
Q

what is the unemployment rate?

A

the number of unemployed people expressed as a percentage of the labour force. It’s calculated as:

19
Q

what is the employment rate?

A

a measure of the extent to which the available labour resources (people available to work) are being used. It’s calculated as:

20
Q

what is the labour force participation rate?

A

the proportion of the total working-age population who are currently in the labour force. That is, the proportion of the working-age population who are currently employed or seeking work. It’s calculated as:

21
Q

what is the formula for labour force?

A

L=E+U

22
Q

what are the different types of unemployment?

A
  1. frictional unemployment: type of unemployment that is due to the fact that people are temporarily between jobs either because they quit their current job or they got fired.
  2. Structural unemployment: due to a mismatch between available jobs and available workers.
  3. cyclical unemployment: results from the short-term cyclical fluctuations in the economy.
23
Q

what is the expenditure approach formula?

A

C+I+G+NX+(X-IM)

24
Q

What is indirect taxes?

A

are sales taxes paid by consumers on their purchases (goods and services taxes - GST)

25
Q

what is subsidies?

A

are financial aid and grants given to private corporations by the government to reduce their production cost.

26
Q

what is depreciation?

A

also called capital consumption allowance, is the amount of money private firms spend on repairing their used or depreciated physical capital (machinery and equipment), during the year.

27
Q

what is the difference between GDP and GNP

A

GDP: Income earned within Canada by Canadian workers and investors, Income earned within Canada by foreign workers and investor (not part of Canadian GNP).
GNP: Income earned within Canada by Canadian workers and investors, Income earned abroad by Canadian workers and investors (not part of Canadian GDP)

28
Q

what is the formula for GNP:

A

GNP= GDP + net income from abroad

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