revision questions chapter 20 pt1 Flashcards
In the expenditure approach to GDP, the largest component is…
consumption expenditure
investment refers to the purchase of
new capital
net exports of goods and services =
the exports of goods and services - the imports of goods and services
what is a flow variable
- quantified variable that is measures over a specified period of time
- e.g. investment
In the national accounts, government expenditures on goods and services exclude
transfer payments
Because pollution reduces economic welfare, real GDP
overstates economic welfare
national saving is defined as
saving by households and government
The approach to GDP that sums compensation of employees, gross operating surplus, mixed income, and indirect taxes and subtracts subsidies is the
income approach
opportunity cost approach
represents the net benefit lost by rejecting some alternative course of action.
income approach
a type of real estate appraisal method that allows investors to estimate the value of a property based on the income the property generates.
expenditure approach
takes into account the sum of all final goods and services purchased in an economy over a set period of time.
The income approach to measuring GDP sums together
compensation of employees, gross operating surplus, rental income, income from self employment, and indirect taxes paid, and subtracts subsidies paid by the government.
what does the chained volume measure method of calculating real GDP compare to
quantities of goods produced in two consecutive years using prices from the first of the two years.