Week 1 Flashcards

1
Q

What is GDP?

A

GDP (Gross Domestic Product) is the total market value of all final goods and services produced within a specific territory in a specific time period

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is GDP per capita

A

GDP divided by population

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is the national accounting identity

A
Y = C + I + G + NX
Income = consumption + Investment + Government Purchases + (Imports - Exports)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is the income approach to GDP

A
  • Measure the sum of all incomes in an economy

- wages, salaries, Corporate profits etc.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is Depreciation

A
  • The deterioration of capital stock due to wear and tear

- GDP - Depreciation = Net Domestic Product

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What share of GDP does labor comprise

A

Two thirds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What Share of GDP does Capital Comprise

A

One third

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Which of the following does NOT increase the U.S. GDP?

a. The U.S.government purchases a tank from a U.S.company.
b. The U.S.government increases social security payments.
c. The U.S. government buys cars from a South Korean company.
d. The French government purchases a tank from a U.S.-based company

A

B, c

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Formula For implicit GDP Price deflator

A

(Nominal GDP/ Real GDP) x 100

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

CPI Formula

A

(Cost of base year quantities at current prices / Cost of base year quantities at base year prices) x 100

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is an endogenous Variable

A
  • One of the unknowns or outcomes of a model

- EG. The level of output in the Solow Model or the level of inflation in the short-run model

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is an exogenous variable

A

A component of an economic model that changes over time in an exogenous fashion

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is potential output

A

The amount of output an economy would produce if all factors were fully employed and all prices were completely flexible

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Short-run definition

A

Several months up to two-years.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Long-run definition

A

More than several years

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

How to measure the state of the economy

A

Production = expenditure = income

17
Q

What is included in GDP

A
  • Goods and services that transact in markets
18
Q

What is omitted from GDP

A
  • the value of time
  • Health of nation
  • Changes in environmental resources
19
Q

Economic profit definition

A
  • Under perfect competition, Economic profit is equal to 0 as all revenue is paid out to factors of production
20
Q

Trade Balance Definition

A

Net Exports. Exports - Imports

21
Q

Capital Definition

A

Stock of machines, buildings, equipment etc.

22
Q

Nominal GDP Formula

A

Nominal GDP = Price level x Real GDP

23
Q

Inflation Rate

A

The percentage change in the aggregate price level of an economy