Week 1 - Introduction to Macro & National Accounting Flashcards
What is GDP
The monetary value of all finished goods and services produced in an economy in a given time period (a year)
What is a recession
2 consecutive quarters of negative real GDP growth
How do you calculate the real economic growth rate
Growth1, t-1 = GDPt - GDPt-1 / GDPt-1
What is the ILO definition for unemployment
Those who are without work, able to start work in the next 2 weeks and
have actively sought work for the last 4 weeks
What is inflation
The general rise in prices of goods and services in an economy over time, that erodes the purchasing power of money
What is the ONS definition for economic inactivity
People not in employment who have not been seeking work within the last 4 weeks and/or are unable to start work within the next 2 weeks
What are Intermediate goods
Goods which are used to produce a final good, that fully depreciate in the production process
What are Capital goods
Physical assets or resources that are used in the production of goods and services, which do not depreciate in the production process
What is Value added
The change in the value of a good as it moves through the production process
How do you calculate Value added
Value added = (value of gross output + capital goods) - value of intermediate inputs
How is Investment by firms financed by the savings of households (x3)
- Loans through banking system (using household savings)
- Issuing debt (bonds) which are sold to households in the financial market
- Issuing equity (shares) which re sold to households in the financial market
What happens to a firm’s unsold stock of Inventory
They are counted as part of investments by firms, and are counted as dis-investments when they are sold in the next year
What is the Inflation rate
The annual percentage change in the general price level of goods and services
What is Nominal GDP
GDP computed at current prices
What is Real GDP
GDP computed at the prices of a base year (adjusted for inflation)
What is the GDP Deflator + formula
A measure of the price level:
deflator = (nominal GDP / real GDP) x 100
How do you calculate the Inflation rate
Calculate the difference in the deflator for any 2 years, holding the base year constant
What is GDP per capita
GDP per capita = Total GDP / Population
What is the relationship between GDP per capita and Population growth (x2)
- When the population is growing over time, changes in total GDP will be greater than changes in per capita GDP
- When the population is shrinking over time, changes in total GDP will be less than changes in per capita GDP
