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BUSA531 - Macroeconomics > Unit 1 - Intro to Macroeconomics > Flashcards

Unit 1 - Intro to Macroeconomics Flashcards

1
Q

What does GDP add together

A
  • Personal consumption
  • Government expenditures
  • Net exports
  • Net capital formation
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2
Q

What is a recession?

A

When Real GDP shrinks for 2 or more consecutive quarters.

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3
Q

What is the purpose of the World Bank?

A

The World Bank was established to provide investment funds for infrastructure reconstruction and development in war-torn areas and less developed nations.

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4
Q

What are the two methods used to convert GDP value to U.S. dollars?

A
  • Market Exchange rates.
  • Purchasing-power-parity (PPP) Exchange rates.
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5
Q

True or false: The Gross National Happiness (GNH) an actual index.

A

False.

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6
Q

What is GDP measured in?

A

GDP is measured in the currency of the country in question.

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7
Q

What is the Subjective Well-Being (SWB) index?

A

The Subjective Well-Being index measures quality of life “satisfaction” by surveying people’s moods and emotions.

It is based on the judgements of survey respondents. Hence the name “Subjective Well-being”.

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8
Q

What is Genuine Savings (GS)?

A

Genuine Savings (GS) is defined as “the true level of saving in a country after depreciation of produced capital…”

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9
Q

True or false: The Ecological Footprint does not use GDP

A

True.

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10
Q

Why is GDP considered inadequate

A

It only measures monetary transactions

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11
Q

What is the relationship between GDP and GPI?

A

GDP measures current income.

GPI measures sustainability of the GDP.

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12
Q

What is Engel’s law?

A

Engel’s law is an observation in economics stating that as income rises, the proportion of income spent on food falls, even if actual expenditure on food rises.

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13
Q

How are GDPs of two countries compared?

A

GDPs of two countries are compared by converting GDP to U.S. Dollars.

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14
Q

What 3 things does GPI measure?

A

GPI compares 3 measurements

  • Economic growth (GDP)
  • Current environmental issues
  • Sustainable use of natural resources
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15
Q

What is Gross National Product (GNP)?

A

GNP counts all the output of a nation’s residents.

Example: If a German-owned company has a factory in the United States, the output of this factory would be included in U.S. GDP, but also in German GNP.

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16
Q

What is Gross Domestic Product (GDP)?

A

GDP measures the monetary value of final goods and services —that is, those that are bought by the final user— produced in a country in a given period of time

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17
Q

What 4 things does the human development index measure?

A
  • Life expectancy
  • Adult literacy
  • Mean years of schooling
  • Real GDP per capita
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18
Q

Why is it difficult (or impossible) to create a single unambiguous progress metric?

A
  • Because there are many conflicting progress concepts

and

  • Because the data to support (even monetary) metrics is incomplete or unavailable.
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19
Q

What economic activities are excluded from GDP measurment?

A
  • Volunteer work
  • (costs of) crime
  • (costs of) depletion of natural resources
  • (costs of) prison population
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20
Q

What is Green GDP?

A

Green GDPs are GDP indexes that include estimates for environmental degradation and depletion of natural resources.

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21
Q

Genuine savings measures

A

True level of savings after depreciation of producers

Capital + Investments in human capital - (Depletion of Minerals, Energy, Forests and air pollution) = Genuine Savings

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22
Q

What is Ecological Footprint?

A

The Ecological Footprint (EF) assesses whether an individual, city, or nation is using available ecological assets faster than the supporting ecosystems can regenerate those assets.

23
Q

What does GDP ignore

A

Changes in

  • natural capital
  • social/community capital (the human components)
24
Q

What is Real GDP?

A

Real GDP is Gross Domestic Product adjusted for inflation to allow comparisons between GDP of different periods.

25
Q

What is the Human Development Index?

A

Human Development Index (HDI) is an annual Human Development Report that shows how well economic growth and human development is improving human well-being in the nations of the world.

26
Q

What is an ecological footprint?

A

A comparison of asset usage and its supporting ecosystem.

27
Q

What is GDP not capable of measuring?

A

GDP does not measure

  • overall standard of living in a country
  • environmental damage
  • noise
  • depletion of non-renewable resources
  • leisure time
  • quality of life
28
Q

Name some Economic and Human indexes

A
  • GDP - Gross Domestic Product
  • ISEW - Index of sustainable economic welfare
  • GPI - Genuine Progress Indicator
  • Genuine Wealth Indicator
  • Green GDP
  • GNH - Gross National Happiness
29
Q

What does the Living Plant Index measure?

A

The extent and severity of biodiversity loss.

Specifically:

  • Worlds forests
  • Freshwater
  • Marine ecosystems
30
Q

What is Gross National Happiness?

A

Gross National Happiness (GNH) is a principle for guiding Bhutanese development consistent with the country’s cultural values.

31
Q

What limitations do indexes have

A

Lack of consensus on

  • selecting non-monetary measurements
  • quantifying measurements (with the exception of money… but even that does not have 100% consensus)
32
Q

What can happen if wealth is not distributed equally

A

It can lead to increased crime, reduced worker productivity, and reduced investment

33
Q

What are some “Quality of Life” measures?

A

The Human Development Index ranks countries on

  • life expectancy
  • literacy and school enrollment.

The Genuine Progress indicator measures…

The Gross National Happiness indicator…

34
Q

how do Market Exchange and PPP Exchange rates compare in advanced countries?

A

The ration of Market exchange rate to PPP exchange rate in advanced countries is usually close to 1:1

35
Q

What “non-market” activities are included in GDP measurement?

A
  • Defense spending
  • Emergency housing spending
  • Education spending
  • Healthcare spending
36
Q

What does the Happy Plant Index account include

A
  • Life expectancy
  • Life satisfaction
  • Ecological foot print
37
Q

Past measures prepared by official authorities are generally confined to what measurements?

A
  • Population
  • Foreign trade
  • Government revenues and expenditures
  • National debt
38
Q

What organization was Genuine Savings (GS) build for?

A

The World Bank.

39
Q

What “progress” topics are usually compared when debating human progress?

A
  • Material progress
  • Political progress
  • Cultural progress
  • Intellectual progress
  • Population growth
40
Q

What information do GPI and ISEW share

A
  • personal consumption data
  • crime
  • environmental degradation
  • loss of leisure
  • infrastructure
  • human services (like volunteering and housework)
41
Q

Name as many quality of life indicators as you can

A
  • Educatio
  • Economy
  • Energy
  • Environment
  • Health
  • Human rights
  • Income
  • Infrastructure
  • National security
  • Public safety
  • Recreation
  • Shelter
42
Q

Where can the international standard for measuring GDP be found?

A

The System of National Accounts (1993).

It was compiled by the IMF, EC, OECD, UN and World Bank.

43
Q

According to Engelman what are the 3 distinct courses of “the standard of living debate”?

A
  • The politics of the British class struggle
  • Comparisons of 20th century British growth with 20th century communist economic growth
  • Emerging attitudes toward society and culture
44
Q

How do Market Exchange and PPP Exchange rates compare in developing countries?

A

The ratio of Market exchange rate to PPP exchange rate in developing countries is between 2:1 and 4:1.

45
Q

What is the generally accepted measure for standard of living?

A

Average real gross domestic product (GDP) per capita

46
Q

Green GDP includes adjustments for…

A

Natural resources and environmental degradation

47
Q

What does ‘growth is good’ mentality promote?

A

Lack of political leadership and vested interest In Maintaining status quo

48
Q

What does Genuine Savings (GS) measure?

A

GS measures the built, natural, and intangible capital that is required for human society to exist and to thrive.

49
Q

What is Net Domestic Product (NDP)?

A

NDP = GDP - Total Depreciation.

NDP is the GDP subtract all depreciation (the wear and tear on machinery, buildings, etc)

50
Q

What is the purpose of the Genuine Progress Indicator?

A

The Genuine Progress Indicator (GPI) is designed to measure the sustainability of GDP, essentially measuring whether progress is a result of living off the interest of community capital or spending it down.

51
Q

What other ways can we measure beyond GDP and GNP

A
  • Indexes that measuring aspects of well being.
  • Composite indexes that combined both approaches
52
Q

What are the 3 different ways GDP can be viewed?

A
  • The Production Approach = Total Sales - value of inputs
  • The Expenditure Approach = Total purchases made by end users
  • The Income Approach = Sales - costs
53
Q

What are the 2 main reasons the International Monetary Fund (IMF) was created?

A

The IMF was created as a forum for collaborative management of international monetary exchange and for stabilization of the exchange rates of countries’ currencies.

54
Q

True of False:

The Subjective Well-Being index uses GDP in it’s measures.

A

False

BUSA531 - Macroeconomics (8 decks)

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