Revision for Tsk 5 Flashcards
households are owners of productive resources (land, labor, capital and overseas) and the buyer of final goods+services.
Firms are employers of resoruces and produce all goods+services in an economy.
When is quilbobirium
∑O = ∑Y = ∑E
This equality known as macroeconomic equilibrium
Full equol.librium circular flow
left side = right side
S+T+I=G+I+X
GDP DEF
GDP IS THE PERSSITNET AND APPREHESABLE RISE OF PRICE OF GOOODS AND SERVICE OVER A PERIOD OF TIME
gdp formula
GDP = C + I + G + (X - M)
Determinants of aggregate consumption:
a) Disposable income b) Household wealth c) Consumer expectations d) Government policies
2 TYPES OF PRODUCTS FOR CONSUMPTION +EG
DURABLE AND NONDURABLE -EG DURABLE CAR, HOUSE NON DURABLE IS FOOD
3 MAIN CATEGORIES OF INVESTMENT
- Business investment – spending by firms on equipment, buildings and construction
- Residential investment – spending by households on new houses & apartments
- Inventories – changes to a firm’s inventories (stocks of unsold goods).
2 MAIN CATEGORIES OF GOV EXPENDITUE
CURRENT AND CAPITAL
Determinants of aggregate consumption:
a) Rate of interest b) Real rate of interest c) Business expectations d) Government policies
WHAT IS CAPITAL EXPNDITURE
spending by the government on infrastructure and other capital goods such as new roads, schools and hospitals
WHAT IS CURRENT EXPENDITURE
government spending on goods & services including salaries of government employees
TRANSFER PAYMETN ADN Y THEY AINT PART OF GDP
GOV SPENDING ON UNEMPLOYMENT AND PPESNION DONT COUNT IN GDP
