Unit 3 macroeconomics

Question 1

What is circular flow of income?

Answer 1

A model that shows how money moves through an economy in a constant loop from producers to consumers and back again.

Question 2

Real vs nominal measures of economic activity

Answer 2

Nominal is the metric that has not been adjusted for inflation. Real GDP is nominal GDP - inflation, it is the value of all goods/services produced in 1 year adjusted for inflation.

Question 3

National income

Answer 3

Sum of all factor incomes earned by residents over a year. There are 3 approaches. Expenditure, income, and output.

Question 4

Indexes

Answer 4

OECD better life
happiness
happy planet
human development

Question 5

The business cycle

Answer 5

Refers to changes in real GDP that occur in an economy over time.

Question 6

Types of economy

Answer 6

Closed and open.

Question 7

What is GDP?

Answer 7

Total value of goods/services produced over a specific period of time. Used to measure size of an economy.