The overall level of economic activity

Question 1

national economy

Answer 1

the economy of a nation

Question 2

aggregate demand

Answer 2

the total demand for final goods and services in an economy

Question 3

aggregate dupply

Answer 3

the total supply of goods and services produced within an economy at a given overall price level.

Question 4

average price level

Answer 4

the average price of goods and services within an economy

Question 5

the circular flow model

Answer 5

diagram which represents the monetary flow within an economy

Question 6

injections

Answer 6

investment, government spending and exports that add monetary transactions back into the circular flow.

Question 7

leakage

Answer 7

Imports, savings and taxes which are withdrawals of monetary transactions from the circular flow model

Question 8

the income approach

Answer 8

Income approach: payments that households receive in exchange for providing firms with the FOP (land, labor, capital, entrepreneurship). Wages for labor, interest for capital, rent for land and profit for entrepreneurship.
National income= W+I+R+P

Question 9

the output approach

Answer 9

Output approach: the value of the total output produced in the different sectors of the economy.
National output= outputs of primary sector, secondary sector and tertiary sector

Question 10

the expenditure approach

Answer 10

method for calculating GDP that totals consumption, investment, government spending and net exports.

Question 11

wages

Answer 11

the net income of an individual

Question 12

interest

Answer 12

inancial gain; the difference between amount earned and the cost of production (amount spent)

Question 13

rent

Answer 13

is the positive difference between the actual payment made for a factor of production to its owner and the payment level expected by the owner, due to its exclusivity or scarcity.

Question 14

profit

Answer 14

financial gain and the difference between the moeny that was spend and the money that was wan.

Question 15

consumption

Answer 15

the using up of a resource

Question 16

investment

Answer 16

spending money for a material return.

Question 17

government expenditure

Answer 17

what a government spends in order to archive its planned budged

Question 18

net exports

Answer 18

the amount by which foreign spending on a home country’s goods and services exceeds the home country’s spending on foreign goods and services.

Question 19

gross domestic product

Answer 19

• is one of the primary indicators used to gauge the health of a country’s economy.

Question 20

nominal gdp

Answer 20

is GDP that evaluated at current market prices. Therefore,nominal GDP will include all of the changes in market prices that have occurred during the current year due to inflation or deflation.

Question 21

real gdp

Answer 21

measure of the value of economic output which is adjusted for price changes such as inflation or deflation

Question 22

base year

Answer 22

the year used for comparison for the level of a particular economic index. The arbitrary level of 100 is selected so that percentage changes (either rising or falling) can be easily depicted.

Question 23

per capital gdp

Answer 23

-gross national income divided by the total population.

Question 24

gross national product

Answer 24

• total value of goods produced and services provided by a country during one year

Question 25

nat national product

Answer 25

-GDP minus depreciation

Question 26

net national income

Answer 26

puts together the income of governments, households and producers

Question 27

green gdp

Answer 27

-measures the environmental consequences of a economic growth to an environment

Question 28

the business cycle

Answer 28

a cycle or series of cycles of economic expansion and contraction.

Question 29

recession

Answer 29

a burst in the economy where the economy growth is slow or non, unemployment is high and there is inflation.

Question 30

recovery

Answer 30

phase of the business cycle following recession

Question 31

expansion

Answer 31

phase of the business cycle when the economy moves from a through to a peak

Question 32

long term growth trend

Answer 32

increase in the market value of the goods and services that an economy produces over time

Question 33

national output

Answer 33

the final measure of goods and services produced within a country in one year

Question 34

GDP formula

Answer 34

GDP=C+I+G+XN

Question 35

GDP deflator

Answer 35

Nominal gdp / real gdp

Question 36

gdp per capita

Answer 36

nominal gdp/total population

Question 37

problems with gdp

Answer 37

- ignores social aspect - some output left out - people work fewer hours than before - not include underground activities - no value on the environment - not value for health and wellbeing

Question 38

alternative to gdp

Answer 38

- gross national product (firms abroad counted) - net national product ( GND-depreciation - net national income= NNP-indirect taxes - green gdp= real gdp- environment cost

Question 39

reasons for business cycle

Answer 39

- major innovation - cyclical fluctuation - change productivity