unit 4: GDP Flashcards
taxes
mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities
GDP?
AKA: gross domestic product, the dollar value of final goods and services used within a country’s borders in a given year
nominal GDP
GDP measured in current prices, just looking at a number and how big it is
How is GDP measured?
nominal GDP (current prices) and real GDP (constant prices)
real GDP
GDP measured in constant/unchanging prices, can use to discover whether an economy is actually producing more goods and services regardless of inflation (rising prices)
intermediate goods
products used in the production of final goods; these are not included in GDP (microchips for computer; intermediate)
final goods
in the form sold to consumers, these are included in GDP (computer sold to consumer; final)
What are the limitations of using GDP as a measure of economic activity?
- doesn’t include in GDP if you’re making a product for yourself and not going to sell
-if you do sell a product to a consumer then it is counted in GDP
GDP up or down?
if GDP goes up (after adjusting for inflation) —> economy is expanding OR if GDP goes down (after adjusting for inflation) the economy is contracting
How can GDP provide information about state economies?
- the size of a state’s economy, how big it is (nominal GDP)
- the growth of a state’s economy (real GDP)
Which measure would you use to take differing population sizes into account when comparing state economies?
per capita GDP (state GDP/pop. = GDP per person)
What measure would you use to find the largest economy (in a state)?
nominal GDP
Included in GDP?
- C (consumption, personal & public) + I (investments, private + public) + G (government spending) + (exports & imports) Net
