Week 4- Measuring Domestic Output and National Income lecture Flashcards
National income accounting looking at the___
Overall performance of the economy.
Bureau of Economic Analysis gathering data on___
Income and Product Accounts on US economy.
Gross Domestic Product measures___
Total market value of all value of goods produced in a given year.
GDP including all goods___
- Produced by citizen or goods produced on US soil.
GDP can be used as Monetary Measurement to compare relative values over___
Different years of producing different amount of goods and services.
GDP only values____
Final goods and ignores intermediate goods (goods purchased for resale or for further processing).
Final goods___
Goods in stores ready to be purchases.
Value added tells us how much___
Each goods worth on our process to final goods.
GDP excludes___
Nonproduction transaction (financial transaction and second hand sales).
Public transfer payments are___
Payments gov’t makes directly to households that contribute nothing to current production in return.
Private transfer payments are___
Funds transfer from 1 person to the other.
Stock market transactions___
Purchasing stock.
2 ways to look at GDP:
- Spending___
- Income___
- GDP as the sum of all money spent in buying goods.
2. GDP as income created from producing that goods.
Personal consumption expenditure: all the money that households spent on ___
Durable (3+ yr), and non-durable (food) consumer goods.
Noninvestment transaction___
investments creating new capital assets (create jobs, income).
Gross investment___
Final purchases of machinery, equipment, tool…ALL investment of goods.
Depreciation___
only investment in form of added capital (new).
Gov’t purchases includes:
- Expenditure for goods___
- Expenditure for social capital___
- that gov’t consumes by providing public services.
2. school, highway. Have long life time.
Net exports (Xn)___
Xn=X – M X= export M= import.
GDP formula:
GDP= C+Ig+G+Xn—–Personal consumption + Gross investment + Gov’t spending + net exports.
Rent___
- income from supply property resources.
Compensation___
income from labor resources.
Interest___
money paid by private businesses to suppliers of money capital.
Proprietor’s Income___
net income of partnership and other businesses.
Corporation have limited liability.
National income includes all income that___
flow to American supplied resources, whether they’re here or abroad.
Net Domestic Product___
GDP adjusted for depreciation.
Personal Income___
Income earned as individuals.
Disposable Income formula___
C + S consumption + saving. OR personal income – taxes.
Nominal (unadjusted) GDP-
unadjusted for inflation. Often appears higher than real GDP.
Calculation: =P1+Q1+P2Q2…
Real GDP___
adjusted for inflation.
Price index___
measures price of specified collection of goods called market basket.
Shortcoming of GDP___
- Leisure: Ignore leisure value when looking at GDP.
2. Underground economy: sell illegal stuff. Can’t track or measure.
