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20 Cards in this Set
- Front
- Back
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Final Good |
Good that is about to be consumed
Ex. You going to walmart to buy tires |
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intermediate Good |
Good that is resold in another form
Ex. Mcdonalds buying buns that will be resold |
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Things that do not count GDP |
Used Goods - only counted once new not resold
Financial Transaction - Securities- Stock already used
Private Transfer - Parents give you money Gov't Transfer - food stamps |
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Limits to using GDP |
Not all countries measure the same thing Ex. Germany counts prostitution America counts alcohol |
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Two Consumption Factors GDP |
Income - what you make- As income goes up spend more
Wealth - Value of what you own Ex. House Land Stocks |
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Real GDP |
GDP that has been adjusted for inflation |
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How do we measure the inflation rate |
CPI- consumer price index |
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Foreign Exchange rates |
Exchanging currency for other currency 1. Fixed - Gov't can fix rate 2. Floating - market always changing rate |
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Easterlin Paradox |
If a country GDP increases what will happen to country happiness Poor Country - make them happier Wealthy Country - no effect wont even notice it |
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Economic Growth |
How the country is growing |
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Why do psychologist feel Economic grow can be bad |
our expectations exceed reality |
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Rule of 70 |
measuring Economic growth % of growth divide by 70 |
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Aspects of technology |
Growth come from factors and production Research and Development - money to come up with new products a. patents - Gov't protect inventions b. Positive externalities - help but still benefit open Economy - fair trade Innovations - taking something already exist and create new use Ex. olestra
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Why are imigrants such good inventors |
Not allowed to follow normal pattern so invent and change something to make great |
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Property Rights |
Cant establish unless guaranteed to control it. Ex. own business but can lose to gov't |
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Poverty levels |
Absolute - a number gov't sets as standard Relative - whether you feel rich or poor |
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Keys to economic development |
Establish property rights - guarantee once buy business or property its theirs
Develop Education system - Companies move where smarter workers are Ex. Haiti keep education down to control people Letting creative destruction take place- new better things replace old Limit protectionism - protect thing in country by placing tariff to save jobs |
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Things that can affect demand |
Real Balance Effect - wealth effect EX. 2008 housing fell off Interest Rate effect - Interest rate go up demand go down open economy effect- we will by more foreign products once restrictions are lifted |
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Increase Aggregate Demand |
Increase money circulation - increase money floating around co8untry Income secure about your future - you spend more money now if you know you will have more tomorrow Improve econmy conditions in other country - help othe countries establish themselves economically we will export more goods lower interest rate- o interest rate will make you buy lower taxes weak dollar value - country will buy more american goods |
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Wage / Price freeze |
negative - no incentive to produce Ex. Gas goes up overseas but can't change here
Low quality of good Ex. hoodies were cotton now polyester mix |
