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cct219: Media Economics I > Week 10: macro indicators > Flashcards

Week 10: macro indicators Flashcards

1
Q

Welfare Society

A
  • the general health of a society’s economy
  • transfer payments and personal income taxes
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2
Q

Transfer payments

A
  • rich people’s income transferred to poor people to stimulate economy
  • redistributing money creates jobs
  • based on the principle of means testing rather than universality
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3
Q

Means testing

A

do they have the means to provide for themselves

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4
Q

Universality

A

everyone should have the same min income enough to buy basic needs

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5
Q

Productive assets

A

making stuff that gives people work (unlike stocks)

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6
Q

Principles of taxation

A
  • benefits received
  • ability to pay
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7
Q

Benefits received

A

ex. gasoline taxes for roadwork, walmart for using 18 wheelers

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8
Q

Ability to pay

A

ex. personal income tax

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9
Q

Progressive taxes

A

increase as a proportion of income as income rises

ex. 10% taken from everyone’s income

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10
Q

Proportional taxes

A

stay constant as a proportion of income as income rises

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11
Q

Regressive taxes

A

decrease as a proportion of income as income rises

ex. poor people paying more taxes

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12
Q

Personal income taxes

A
  • progressive
  • the proportion of income paid in tax rising significantly with a household’s income level
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13
Q

Gross Domestic Product (GDP)

A
  • the total dollar value of all final goods and services produced in an economy during a particular period
  • economic activities that happen domestically (in boarders)
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14
Q

How GDP is calculated

A
  • the income approach
  • the expenditure approach
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15
Q

GDP identity

A

states that GDP expressed as total income is identical to GDP expressed as total spending

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16
Q

Income approach

A
  • wages and salaries
  • corporate profits
  • interest income
  • proprietors’ incomes and rents
17
Q

Corporate profits

A

retained earnings, dividends, corporate income tax

18
Q

Interest income

A

interest paid on business loans and bonds

19
Q

GDP calculated with the expenditure approach

A
  • indirect taxes
  • depreciation
  • statistical discrepancy
20
Q

The Expenditure Approach

A
  • is the sum of purchases in product markets
  • is based on value added at each production stage to avoid double counting
  • excludes financial exchanges and second-hand purchases
21
Q

GDP formula

A

C + I + G + (X – M)

22
Q

4 Components of the Expenditure Approach

A
  • Personal consumption (C)
  • Gross investment (I)
  • Government purchases (G)
  • Net exports (X – M)
23
Q

Personal consumption (C)

A

consists of household purchases of services and nondurable and durable goods

24
Q

Gross investment (I)

A

represents business and government purchases of real capital (including added inventories) and is financed through retained earnings and personal saving

25
Q

Government purchases (G)

A

exclude transfer payments and are financed through taxes and borrowing

26
Q

Net exports (X – M)

A

equals exports (foreign purchases of Canadian products) minus imports (Canadian purchases of foreign products)

27
Q

Capital stock

A

the total value of productive assets that provide a flow of revenue

Calculation example from slides

28
Q

Net investment

A
  • the annual change in an economy’s capital stock
  • = gross investment - depreciation
29
Q

Positive Net investment

A

= growing economy with an increasing capital stock

30
Q

Negative Net investment

A

= a declining economy with a decreasing capital stock

31
Q

Sources of funds for investment

A
  • businesses’ retained earnings (profit)
  • personal saving (S)
  • these are inflows into financial markets, while investment is an outflow
32
Q

Financial inflows to government

A
  • household taxes minus transfer payments
  • business taxes minus subsidies
  • government borrowing
33
Q

Government purchases

A

a financial outflow from government

34
Q

Connections with the Rest of the World

A

exporting more than importing grows economy and revenue flow

35
Q

Per capita GDP

A
  • GDP per person
  • = GDP divided by population

ex. economy $1b, population 1b
GDP = $1

36
Q

Per capita real GDP

A
  • inflation adjusted GDP per person
  • expressed in constant dollars from a given year
  • used to compare living standards in a given country over time
37
Q

Limitations of GDP

A

does NOT:

  • include nonmarket activities
  • fully capture improvements in product quality
  • indicate the composition of output
  • indicate the distribution of income
  • indicate how much leisure is enjoyed by a country’s citizens
  • distinguish between activities that are and are not harmful to the environment
38
Q

Gross National Product (GNP)

A
  • the total income acquired by Canadians both within Canada and elsewhere
  • = GDP - net investment income to the rest of the world

ex. doesn’t matter where just has to be a Canadian frim

cct219: Media Economics I (12 decks)

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