Macroeconomics LS2-LS5 Flashcards
What is economic growth?
The rate of change of output.
What is GDP?
Total value of goods and services produced in a country within a year.
What is GNI?
The value of goods and services produced by a country over a period of time plus net overseas payments and dividends
What is GND?
Is the value of goods and services produced over a period of time through labour both domestically and overseas.
What is PPP?
An exchange rate of one currency for another which compared how much a typical basket of goods in the country costs
What are problems of using GDP?
1- Exclusion of real transactions 2- Value of leisure 3- The underground economy 4- Spending 5- Quality of goods and services 6- Zero- prices goods are excluded
What is national happiness?
Read.
What is aggregate demand?
Total of all expenditures in an economy at any given price.
What is the AD equation?
AD= C + I + G + (x-m)
Reasons for movements along the demand curve.
1- The wealth effect
2- The international trade effect
3- The interest rate effect
What is disposable income?
Income households devote to consumption and saving, taking into account payments of direct taxes and transfer payments.
Factors affecting consumption.
1- changes in consumer confidence
2- changes in interest rate
3- changes in personal income tax
4- changes in household indebtedness
Factors affecting investment.
1- changes in business confidence 2- changes in interest rates 3- improvements in technology 4- changes in business taxes 5- the level of corporate indebtedness
Factors affecting gov spending.
1- changes in political priorities
2- changes in economic priorities
Factors affecting net trade (x-m)
1- changes in national income abroad
2- changes in exchange rates
3- changes in level of trade protection
What are injections into the circular flow of income?
Government spending
Investment
Exports
What are withdrawals to the circular flow of income?
Government taxation
Imports
Savings
What is aggregate supply?
The volume of goods and services produced within an economy at a given price level.
What is the difference between SRAS and LRAS?
SRAS is period of time when at least one FOP is fixed and cannot be changed.
In LRAS, all FOP are variable.
Factors affecting SRAS
1- Changes in cost of raw materials and energy
2- Changes in exchange rates
3- Changes in tax rates
What is LRAS?
Is a measure of a country potential productive output
Factors influencing LRAS:
1- Technological advances 2- changes in relative productivity 3- Changes in education and skill 4- Demographic changes and migration 5- competition policy 6- changes in gov regulations
