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30 Cards in this Set

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  • Back
The employment act of 1946 was to maximize what 3 things?
Production, employment, purchasing power
What is GDP?
Gross domestic product- the value of all final goods and services produced in the US per year.
How much is the gross domestic product?
estimated 10 trillion
What is the formula for GDP
Sum(price x quantity)
How do you calculate GDP?
- To calculate GDP, using only the prices of final goods and not intermediate goods.
The incomes generated in the national income are
Wages (labor)=70%
Rents (on land)= 1%
Interest (on capital,tools)= 10%
Profit (residual)=20%
What two types are profit are there in the national income?
Corporate and proprietors
What are the 4 groups of buyers on final goods?
Household, firms, government, and rest of the world
What are the 4 types of expenditure that correspond to the four groups of buyers of final goods?
Consumption, Investment, govt purchases of goods and services, and net exports of goods and services.
What is consumption expenditure?
It is the expenditure by households on consumption goods and services
What is investment expenditure
purchase of capital (tools, machines..) by businesses or firms
What percentage of gdp does consumption expenditure make up?
2/3
What percent gdp does investment expenditure make up?
15
What percent does gov purch make up of gdp
20
What percent does net export make up of gdp
4
What is total expenditure
The sum C+I+G+NX
This also = gdp
Total expenditure equals...
GDP and National income
GDP =
net domestic product + depreciation
GDP-depreciation =
NDP (net domestic product)
GDP-depreciation =
NDP (net domestic product)
NDP-individual business tax=
Net income
Net income- SStaxes +SScheck -Corp profit + corp dividends =
Personal Income
Personal income - personal tax =
disposable personal income
Real GDP=
value of final goods and services produced in a year when valued at constant prices
Nominal GDP=
value of final good when valued at prices that prevailed in that same year
GDP deflater...
(nominal GDP/Real GDP)x 100
We do not count as part of gdp spending on:
used goods and financial assets
Corporate profits are
the profits of corporations, a combination of interest on capital and profit for entrepreneurship
Proprietors income is
proprietors run their own businesses, thier income is a mixture of compensation of employees (wages), net interest, rental income, and corporate profit
What are the goods and services omitted from gdp
household production, underground production, leisure time, environment quality