Macroeconomics and the Indicators of Economic Output Flashcards
Branch of economics that focuses on the economy and it’s entirety
Macroeconomics
Macroeconomics examines how economic actors, as a whole, react to the changes in the economic environment.
True
Major Concerns of Macroeconomics
• Inflation
• Unemployment
• Economic Growth
• Exchange Rates
• International Trade
• Government spending and taxation
• Central Bank Operations
Firms provide goods and services to the household in exchange for their expenditure, which comes from wages paid by the firms to the households.
The Circular Flow Diagram
How do you measure the value of an economy
Income Approach
Expenditure Approach
To measure the value of an economy is to add all the payments made by the economy for the factors of production(Households)
Income Approach
This includes wages, rent, dividends, interest income, profits, etc. to measure the value of an economy
Income approach
To measure economic value by adding all the expenditures made by different economic actors
Expenditure Approach
The most popular way to measure economic value
Expenditure Approach
What do you use to measure the value of the output of a country, regardless of nationality of the producer?
GDP (Gross Domestic Product)
Market Value of all final goods and services produced in an economy for a given period
Gross Domestic Product
How is Market Value computed?
Price X Quantity
Goods purchased for the purpose of resale or producing other goods for further sale.
Intermediate Goods
Goods purchased not for the purpose of resale or producing other goods for further sale.
Final Goods
Intermediate goods are included in the count of total purchases.
False
Intermediate goods are not included in the final count because of?
Double Counting
