Unit 2 Flashcards

(30 cards)

1
Q

What is a national account

A

measures the nation’s economic performance, compare nations economic points, tracks the economy growth

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2
Q

How do households earn income

A

wages, dividends, interest payments, rental, transfer payments from gov (unemployment benefits ect.)

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3
Q

How do you calculate disposable income

A

income - taxes + gov transfers (available to spends on consumption and to save)

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4
Q

What is consumer spending (C)

A

amount spent on goods and services

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5
Q

What is government spending

A

The money that the gov spends on the purchases of goods and services

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6
Q

What is investment spending (I)

A

machinery, equipment, structure, inventory

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7
Q

What are exports

A

goods and services produced domestically and sold to other countries

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8
Q

What are imports

A

goods purchased by countries residents from abroad

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9
Q

What are final goods and services

A

They are goods and services that are sold to the end user

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10
Q

What are Intermediate goods and services

A

They are bought by one firm from another firm that are used in production of a final good

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11
Q

What is Gross Domestic Product GPD

A

total value of final goods and services produced in the economy during a given period of time. Does not include the value of intermediate goods

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12
Q

What is aggregate spending

A

GDP - total spending on domestically produced goods

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13
Q

What is Net exports

A

Exports - Imports

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14
Q

how do you calculate GDP

A

GDP = C + I + G +X - IM
Add up he value added of all producers
Add up all income paid to factors of production

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15
Q

What is nominal GDP

A

value of final goods and services produced in the economy during the year, calculated using the prices current in the year

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16
Q

What is real GDP

A

value of final goods and services produced in the economy during the year, calculated using the prices of a selected base year

17
Q

What is GDP per capita

A

the GDP per individual finding the average income per person

18
Q

What is chained dollar

A

method of calculating changes in real GDP using the average between the growth rate calculated using an early base year and the growth rate calculated using a late base year

19
Q

what is aggregate price level

A

measure of the overall level of prices in the economy

20
Q

How do you measure aggregate price level

A

To measure the aggregate price level, you create a basket of goods and services and calculate the cost of purchasing

21
Q

What is a price index

A

ratio of the current cost of that market basket to the cost in a base year, multiplied by 100

22
Q

What is CPI

A

most common measure of aggregate price level, similar to index by goods purchased by firms is the Producer Price Index (PPI)

23
Q

What is the GDP deflator

A

measures the price level by calculating the ratio of nominal GDP to real GDP
GDP Deflator = (Nominal GDP/Real GDP)*100

24
Q

What is real wage

A

is the wage rate divided by the price level

25
What is real income
is income divided by the price level
26
What is nominal interest rates
interest rate expressed in dollar terms
27
What are real interest rates
nominal interest rate minus the rate of inflation
28
How do inflation rates affect borrowers and lenders
A higher then expected inflation rate is good for borrowers and bad for lenders A lower than expected inflation rate is good for lenders and bad for borrowers
29
What is disinflation
the process of bringing the inflation rate down
30
Whats not included when calculating GDP
intermediate goods and services used goods financial assets like stocks and bonds foreign-produced goods are services