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22 Cards in this Set
- Front
- Back
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What is gross domestic product?
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the most widely reported measure of a nation’s economic performance
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What does GDP measure?
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The market value of all final goods and services produced in a nation during a period of time, usually a year
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What is gross national product (GNP)?
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GNP measures the market value of all final goods and services produced by a nation’s residents, no matter where they are located
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What is an advantage of using GDP?
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GDP measures value using dollars, rather than a list of the number of goods and services
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Does GDP measure secondhand transactions?
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No, Current GDP does not include the sale of a used car or the sale of a home constructed some years ago
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What are intermediate goods?
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Goods and services used as inputs for production of final goods
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Does GDP count intermediate goods?
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No, to avoid double counting, GDP only measures final goods and services
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Does GDP measure nonproductive financial transactions?
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No, GDP does not count purely private or public financial transactions such as giving gifts, stocks, bonds, or transfer payments
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What is a transfer payment?
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A government payment to individuals, not in exchange for goods or services currently produced
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What leakages are present in the circular flow of economic activity?
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Household saving
Household taxes paid Income spent on imports |
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What injections are present in the circular flow of economic activity?
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Business spending
Government spending Foreign spending |
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What are the two approaches we use to measure GDP?
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Expenditure
Income |
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What is the expenditure approach for measuring GDP?
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The national income accounting method that measures GDP by adding all the spending for final goods and services
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What is the income approach for measuring GDP?
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What is the expenditure approach for measuring GDP?
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What are the four sectors of GDP?
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GDP = C + I + G + (X - M)
Consumption Investment Government Foreign (X - M) |
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What are the Income components of GDP?
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GDP = Compensation of employees + rents + profits + net interest + nonincome adjustments
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What is depreciation?
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An allowance for the capital worn out producing GDP
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What are indirect business taxes?
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Taxes levied as a percentage of the prices of goods sold and therefore become a part of the revenue received by firms
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What are the 5 shortcomings of GDP?
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Nonmarket transactions
Distribution, kind, & quality of products Neglect of leisure time Underground economy Economic bads |
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How do you arrive at NDP (Net Domestic Product)?
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GDP minus depreciation of the capital worn out in producing output
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What is "real" GDP?
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The value of all final goods produced during a given time period based on the prices existing in a selected base year
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What is a chain price index? What are the 2 most commonly used price indices?
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A measure that compares changes in the prices of all final goods during a given period to the prices of those goods in a base year.
CPI (Consumer Price Index) Personal Consumption Implicit Price Deflator |
