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24 Cards in this Set
- Front
- Back
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National Income Accounting
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The techniques used to measure the overall production of the economy and other related variables for the nation as a whole.
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Gross Domestic Product(GDP)
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The total market value of all find goods and services produced in a given year.
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Intermediate goods
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goods and services that are purchases for resale or for further processing or manufacturing.
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Final goods
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Goods and services that are purchased for the final use by the consumer.
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Expenditure approach
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-personal consumption expenditures
- gross private domestic investment - government purchases of G&S - Net exports( exports(x)-imports(m)) C+Ig+G+Xn=GDP |
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Income approach
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the method that adds all the income generated by the production of Final goods and services to measure the gross domestic product.
-compensation -rents -interest -proprietors -corporate profits -national income -indirect business Taxes -consumption of fixed capital -net foreign factor income |
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NDP
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(Net Domestic Product)
- NDP= GDP - consumption of Fixed capital |
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NI
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( National income)
Income earned - indirect |
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PI
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(personal income)
NI - Social Security Contributions - coporate taxes + transfer payments |
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DI
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(Disposable income)
DI=C+S |
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Underground economy
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False income report to concell real income.
- gamblers -prostitutes -smugglers -drug dealers |
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Economic growth
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- An increase in real GDP occurring over same time period.
- An increase in real GDP per capita occurring over some time period. |
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The rate of unemployment
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the percentage of the labor force unemployed
unemployment rate = ( unemployed/ labor force) X 100 |
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Types of Unemployment
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Frictional- in between jobs seasonal employment
Structural- changes in structure or company Cyclical- economy unemployment |
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Full employment
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The use of all available resources to produce want satisfying good and services.
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okuns law
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the generalization that any 1-percentage-point rise in the unemployment rate above full-employment unemployment rate will increase the GDP gap by 2 percent of the potential output(GDP) of the economy.
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Inflation and 3 different types
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a rise in the general level of prices.
-Demand-pull: inflation caused by excessive consumer demand. -cost-push: inflation caused by increase in the cost of production. -Hyper inflation: rapid increase in prices as currency loses value. |
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CPI
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( Consumer Price Index)- measures the prices of fixed "market basket" of same 300 goods and services brought by a "typical" consumer.
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APC
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( average propensity to consume)
the % of income used on consumption consumption/income |
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APS
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(Average propensity to save)
The % of income saved saving/income |
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Non determinates of consumption and saving
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-wealth
-expectations -real interest rates -household debt -taxation |
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Interest rate/investment relationship
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-Investment by business: Business invest in capital if a profit is possible. Investment is based on a "excepted rate of return"
- Interest rates: A business must consider whether to invest in capital based on current interest rates. If the potential profit is higher, then the cost of the interest charged the investment should be considered. |
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Multiplier effect
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Determines how much larger that change will be.
change in real GDP/initial change in spending |
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rule of 70
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70/ percentage of annual rate of inflation
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