Week 6 - National income, inflation, unemployment, and economic growth Flashcards
What s the formula for GDP
Consumption + government spending + investment + net exports
What is GDP
Market value of final goods and services produced inside a nation’s borders within a specific time frame
what is Nominal GDP?
Refers to current valuation of that variable
What is Real GDP?
Refers to fixed prices in a particular year ◦
Change in quantities over time teases out the changes in prices
What is more accurate Nominal or real GDP
Real GDP; •Nominal GDP is less important, acts as stepping-stone to finding real GDP
what is consumption?
everything we spend money on
what is government spending
everything the
what is investment
spending on hard assets; plants, property, equipment;
what is net exports
Exports - imports
what is GDP per capita
real GDP / population = real GDP per capita;
•Equation useful for comparing against other nations ◦Example: A single student earning $14 trillion last year vs. the United States earning $14 trillion last year
What is inflation and how do we measure it?
Inflation: A continuous rise in price level; we measure it by calculating the percent change from the previous period. - CPI - taking a basket of goods and services and taking a snap shot 5 years ago and comparing it to now.
what is deflation
general level of prices is falling; always generally bad
what is hyper inflation
unusually rapid inflation - it makes your currency worthless. it can damage or permanently destroy a country’s monetary system
what is stagflation
combination of higher unemployment and economic stagnation with inflation
what is unemployment?
all individuals over 16 who are out of work and have looked for work in last four weeks
