Unit 2 Flashcards
(30 cards)
What is a national account
measures the nation’s economic performance, compare nations economic points, tracks the economy growth
How do households earn income
wages, dividends, interest payments, rental, transfer payments from gov (unemployment benefits ect.)
How do you calculate disposable income
income - taxes + gov transfers (available to spends on consumption and to save)
What is consumer spending (C)
amount spent on goods and services
What is government spending
The money that the gov spends on the purchases of goods and services
What is investment spending (I)
machinery, equipment, structure, inventory
What are exports
goods and services produced domestically and sold to other countries
What are imports
goods purchased by countries residents from abroad
What are final goods and services
They are goods and services that are sold to the end user
What are Intermediate goods and services
They are bought by one firm from another firm that are used in production of a final good
What is Gross Domestic Product GPD
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
What is aggregate spending
GDP - total spending on domestically produced goods
What is Net exports
Exports - Imports
how do you calculate GDP
GDP = C + I + G +X - IM
Add up he value added of all producers
Add up all income paid to factors of production
What is nominal GDP
value of final goods and services produced in the economy during the year, calculated using the prices current in the year
What is real GDP
value of final goods and services produced in the economy during the year, calculated using the prices of a selected base year
What is GDP per capita
the GDP per individual finding the average income per person
What is chained dollar
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
what is aggregate price level
measure of the overall level of prices in the economy
How do you measure aggregate price level
To measure the aggregate price level, you create a basket of goods and services and calculate the cost of purchasing
What is a price index
ratio of the current cost of that market basket to the cost in a base year, multiplied by 100
What is CPI
most common measure of aggregate price level, similar to index by goods purchased by firms is the Producer Price Index (PPI)
What is the GDP deflator
measures the price level by calculating the ratio of nominal GDP to real GDP
GDP Deflator = (Nominal GDP/Real GDP)*100
What is real wage
is the wage rate divided by the price level
