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CPA - BEC > Macroeconomics > Flashcards

Macroeconomics Flashcards

1
Q

Free-Market Flow Model

A

Government, Financial Sector, and Foreign Sector added. Concerned with flow of funds. Prior had individuals and business firms.

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2
Q

Free-Market Flow Model

A

Government, Financial Sector, and Foreign Sector added. Concerned with flow of funds. Prior had individuals and business firms.

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3
Q

What are leakages?

A

Individuals’ income not spent on domestic consumption.

Taxes, savings, and imports

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4
Q

What are injections?

A

Additions to domestic production not from individuals.

Exports, gov spending

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5
Q

GDP?

A

Nominal Gross Domestic Product - Measures the total output of final goods and services produced fore change in the domestic market during a period. FINAL GOODS.

GDP does not include goods and services for which additional processing required
Illegal activities
There is no market exchange (volunteer DIY)
Goods produced in foreign countries by US owned entities…only DOMESTIC

Nominal is GDP not adjusted for prices

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6
Q

Two approaches of GDP measurement

A

1) Expenditures - Using final sales/purchases; the sum of pending by individuals, businesses, governments, foreign buyers (exports)
2) Income - measures GPD as value of incomes and resources’ costs the sum of:

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7
Q

Real GPD?

A

Measures the total output of final goods and services produce for exchange in domestic market during a period at CONSTANT prices. Nominal GDP adjusted for changing prices (index)

Real GDP per capita = Real GDP/population; changes in standards of living

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8
Q

NDP - Net Domestic Product

A

Measures GDP less capital consumption (GDP-depreciation)

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9
Q

Potential GDP

A

Maximum output that can occur in domestic economy without creating upward pressure on general level of prices (inflation) - assumes full use of current resources and technology; estimated adjusting actual GDP

PRODUCTION-POSSIBILITY FRONTIER - Conceptual maximum amount of various goods and services an economy can produce at a given time

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10
Q

GDP Gap

A

Difference between Real GDP and Potential GDP

Real GDP Potential = Negative GDP GAP creates upward pressure on prices

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11
Q

GNP vs GDP

A

GNP - Measures total output of all goods and services produced world-wide using US resources; includes goods and services in foreign countries

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12
Q

NNP - Net National Product

A

Net National Product - Measures the total output of all goods and services produced worldwide using US resources but does not include depreciation (only includes cost of investment in new capital)

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13
Q

National Income (NI)

A

Total payments for economic resources included in the production of all goods and services

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14
Q

Personal Income (PI)

A

Measures total payments for economic resources received by individuals; PI = NI - Corporate profits - SS + Dividends and interest received by individuals + Government

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15
Q

PDI - Personal Disposable Income

A

Measures amount of income individuals have available for spending, after taxes are deducted from total personal

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16
Q

Employment/Unemployment

A
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17
Q

Frictional Unemployment

A

Those not employed because in transition; ex - moving to seek employment, those looking for job they believe meets their education or experience

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18
Q

Structural Unemployment

A

Need for prior types of jobs greatly reduced or eliminated; lack skills for currently available jobs

19
Q

Cyclical Unemployment

A

Downturn in business cycle (economic - recession)

20
Q

Unemployment Rate

A

Percentage of labor force not employed; natural unemployment rate = those unemployed due to frictional, structural, and seasonal reasons (will have this regardless of state of economy)

Full employment is only when there is no cyclical unemployment

21
Q

What are leakages?

A

Individuals’ income not spent on domestic consumption.

Taxes, savings, and imports

22
Q

What are injections?

A

Additions to domestic production not from individuals.

Exports, gov spending

23
Q

GDP?

A

Nominal Gross Domestic Product - Measures the total output of final goods and services produced fore change in the domestic market during a period. FINAL GOODS.

GDP does not include goods and services for which additional processing required
Illegal activities
There is no market exchange (volunteer DIY)
Goods produced in foreign countries by US owned entities…only DOMESTIC

Nominal is GDP not adjusted for prices

24
Q

Two approaches of GDP measurement

A

1) Expenditures - Using final sales/purchases; the sum of pending by individuals, businesses, governments, foreign buyers (exports)
2) Income - measures GPD as value of incomes and resources’ costs the sum of:

25
Q

Real GPD?

A

Measures the total output of final goods and services produce for exchange in domestic market during a period at CONSTANT prices. Nominal GDP adjusted for changing prices (index)

Real GDP per capita = Real GDP/population; changes in standards of living

26
Q

NDP - Net Domestic Product

A

Measures GDP less capital consumption (GDP-depreciation)

27
Q

Potential GDP

A

Maximum output that can occur in domestic economy without creating upward pressure on general level of prices (inflation) - assumes full use of current resources and technology; estimated adjusting actual GDP

PRODUCTION-POSSIBILITY FRONTIER - Conceptual maximum amount of various goods and services an economy can produce at a given time

28
Q

GDP Gap

A

Difference between Real GDP and Potential GDP

Real GDP Potential = Negative GDP GAP creates upward pressure on prices

29
Q

GNP vs GDP

A

GNP - Measures total output of all goods and services produced world-wide using US resources; includes goods and services in foreign countries

30
Q

NNP - Net National Product

A

Net National Product - Measures the total output of all goods and services produced worldwide using US resources but does not include depreciation (only includes cost of investment in new capital)

31
Q

National Income (NI)

A

Total payments for economic resources included in the production of all goods and services

32
Q

Personal Income (PI)

A

Measures total payments for economic resources received by individuals; PI = NI - Corporate profits - SS + Dividends and interest received by individuals + Government

33
Q

PDI - Personal Disposable Income

A

Measures amount of income individuals have available for spending, after taxes are deducted from total personal

34
Q

Employment/Unemployment

A
35
Q

Frictional Unemployment

A

Those not employed because in transition; ex - moving to seek employment, those looking for job they believe meets their education or experience

36
Q

Structural Unemployment

A

Need for prior types of jobs greatly reduced or eliminated; lack skills for currently available jobs

37
Q

Cyclical Unemployment

A

Downturn in business cycle (economic - recession)

38
Q

Unemployment Rate

A

Percentage of labor force not employed; natural unemployment rate = those unemployed due to frictional, structural, and seasonal reasons (will have this regardless of state of economy)

Full employment is only when there is no cyclical unemployment

39
Q

Consumer Price Index (CPI)

A

Relates price of basket of goods and services during period to one in base period;

CPI-U most common - Consumer price index for all urban consumers (U)

Based period for 36 month period 1982 through 1984 - Base period == 100%

EX 1982-84 Base = 100%; 2012 = 229.6, 2013 = 233%

40
Q

Inflation/Deflation

A

Rate of change in CPI-U measures; EX - 2013 = 233, 2012 = 229.6

2013 to 2013 change = 3.4 (change in CPI) not the rate of change; rate of change = 3.4/229.6 (original value) - 1.48% = 2013 rate of inflation

41
Q

Wholesale Price Index (WPI)

A

Measure of deflation/inflation @ wholesale level

42
Q

GDP Deflator

A

Relates nominal GDP to Real GDP; Attempts to include all spending in GDP - more comprehensive than CPI-U or WPI

“Basket” changes more frequently

GDP Deflator = nominal/real x 100

43
Q

Inflation

A

Rate of increase in price level

44
Q

Deflation

A

Rate of decrease in price level

CPA - BEC (62 decks)

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