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25 Cards in this Set
- Front
- Back
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capital |
stock of plants, equipment, inventory and other resources of production. |
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depreciation |
decline in the value of an asset over a given time usually a year. |
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final good |
a good that is produced for final use and not for resale. |
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gross domestic product |
total market value of final goods and services produced within the borders of a nation, even if produced by foreigners, in a given period of time. |
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net investment |
addition to capital stock of nation ( over a year) gross investment is the years production of capital goods. Net investment equals gross investment minus depreciation. |
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nomial GDP |
national output of goods and services valued at current prices ( prices current when output was produced) |
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real GDP |
national output of goods and services valued at constant price. The growth rate in real GDP more accurately reflects changes in output because the effect of inflation have been removed. |
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circular flow of income |
income and output or the monetary flows and income and output or the flows of goods and services |
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two ways to measure national income |
expendiatures incomes approach |
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expenditures approach |
add up the spending on goods and services by households, business, government, and foreigners. |
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capital |
is a nations stock of productive resources, including plants, equipment, and inventory. |
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net investment |
gross investment -depreciation
how much on net is added to a nations capital stock. |
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proprietor income |
is the income of those who own non-incorporate business. |
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value added |
is the value of a business output minus its purchase from other business. |
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remember |
total spending equals total income equals total output.
goods produce but not sold are vounted as sales to the firms producing them
national income income equals total factor payments.
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why are final goods and services counted in GDP |
because all other sales of intermediate products that are resold within the year are reflected in the price of final goods. |
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why do changes in real GDP better reflects how total output is changing than changes in nominal GDP |
change in real GDP reflect changes in real output. Nominal GDP changes when price and/or output changes. |
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what are the two basic national income identities and how are they pictured in the circular flow of income |
a dollar spent it a dollar received |
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what makes GDP gross and NNP net |
net Refers to subtracting depreciation. Gross includes depreciation |
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which national income account best reflects total factor payments |
NI: national Income |
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which national income accounts best reflects the income households receive? the after-tax incomethat household receive |
PI: personal income. DI- personal disposable income. |
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how do household dispose of disposable income |
they consume or save it |
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in a simple economy without international trade or a governments, how are investment and saving related |
I= PRIVATE SAVINGS |
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with a government sector, how do businesses and the government in a sense compete for saving |
business barrow to finance investment spending the governemnt barrows to finance its deficit. the more gov barrows the less business can barrow for investment |
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does GDP measure national welfare |
no. it is a measure of output and spending. |
