Economics #2

Front 1

The most closely watched economic statistic because it is thought to be the best single measure of a society's economic wellbeing

Back 1

GROSS DOMESTIC PRODUCT ACCOUNT

Front 2

Four components of the economy

Back 2

• HOUSEHOLDS

• FIRMS

• GOVERNMENT

• THE REST OF THE WORLD

Front 3

These are considered as the private sectors

Back 3

HOUSEHOLDS AND FIRMS

Front 4

This is the public sector

Back 4

GOVERNMENT

Front 5

This is the international sector

Back 5

THE REST OF THE WORLD

Front 6

Useful way of seeing the economic interactions among the four sectors in the economy

Back 6

CIRCULAR FLOW DIAGRAM

Front 7

This shows the income received and payments made by each sector

Back 7

CIRCULAR FLOW DIAGRAM

Front 8

Cash payments made by the government to people who do not supply goods, services, or labor in exchange for these payments

Back 8

TRANSFER PAYMENTS

Front 9

When households receive more than they spend

Back 9

SAVE

Front 10

Difference between total receipts and the total payments of the household

Back 10

SAVE OR DISSAVE

Front 11

If households receive less than they spend

Back 11

DISSAVE

Front 12

Using up some of previous savings or by borrowing

Back 12

DISSAVE

Front 13

Savings by household

Back 13

LEAKAGE

Front 14

Goods and services produced in the rest of the world

Back 14

IMPORTS

Front 15

Goods and services produced by domestic firms and sold to other countries

Back 15

EXPORTS

Front 16

One lesson from circular flow diagram

Back 16

EVERYONE'S EXPENDITURE IS SOMEONE ELSE'S INCOME

Front 17

Exports minus Imports

Back 17

NET EXPORTS

Front 18

Market value of all final goods and services produced within a country for a given period of time

Back 18

GROSS DOMESTIC PRODUCT (GDP)

Front 19

Measures the amount people are willing to pay for different goods

Back 19

MARKET PRICES

Front 20

Overstating the value of the goods produced

Back 20

DOUBLE COUNTING

Front 21

Approaches in computing GDP

Back 21

• EXPENDITURE APPROACH

• INCOME APPROACH

Front 22

Formula in computing Expenditure Approach

Back 22

GDP = C + I + G + (X-M)

Front 23

Formula for solving GDP using Income Approach

Back 23

GDP = NI + DEPCN + (IT - SUBSDS) + NET FACTOR + OTHER

Front 24

Spending by household on consumer goods and services

Back 24

PERSONAL CONSUMPTION EXPENDITURES ( C )

Front 25

Three main categories of Personal Consumption Expenditures

Back 25

• DURABLE GOODS

• NON-DURABLE GOODS

• PAYMENTS FOR SERVICES

Front 26

Goods that last relatively long time such as automobiles, furnitures, and household appliances

Back 26

DURABLE GOODS ( C )

Front 27

Goods that are used up fairly quickly such as food, clothing, gasoline etc.

Back 27

NON-DURABLE GOODS ( C )

Front 28

Refers to those things that we buy that do not involve the production of physical items such as expenditures for doctors, lawyers, educational institutions

Back 28

PAYMENTS FOR SERVICES ( C )

Front 29

Spending by firms on new capital

(plant, equipment, inventories)

Back 29

GROSS DOMESTIC CAPITAL FORMATION ( I )

Front 30

Changes in fixed capital and changes in stocks

Back 30

GROSS DOMESTIC CAPITAL FORMATION ( I )

Front 31

Represents the addition to or reductions in firms inventories

Back 31

CHANGES IN STOCKS ( I )

Front 32

• Total value of newly produced capital goods.

• It takes no account for the fact that some capital wears out and must be replaced

Back 32

GROSS INVESTMENT ( I )

Front 33

A measure of how much the stock of a capital changes during a period

Back 33

NET INVESTMENT ( I )

Front 34

Gross Investment minus Depreciation

Back 34

NET INVESTMENT ( I )

Front 35

Spending by the government

Back 35

GOVERNMENT CONSUMPTION EXPENDITURES ( G )

Front 36

Expenditures by the national and local government for final goods

Back 36

GOVERNMENT CONSUMPTION EXPENDITURES ( G )

Front 37

Net spending by the rest of the world

Back 37

NET EXPORTS ( X - M)

Front 38

If export is greater than import

Back 38

POSITIVE

Front 39

If Exports is less than Imports

Back 39

NEGATIVE

Front 40

Spending of the rest of the world on goods and services produced in Philippines

Back 40

EXPORTS

Front 41

Countrys purchases of goods and services from the rest of the world

Does not represent a own production

Back 41

IMPORTS

Front 42

A method of computing GDP that measures the income received by all factors of production in producing final goods, which includes wages, rents, interests, and profits

Back 42

INCOME APPROACH

Front 43

Total income earned by factors of production owned by a country's citizens.

Back 43

NATIONAL INCOME ( NI )

Front 44

National income is the sum of these five items:

Back 44

• Employees Compensation

• Proprietors Income

• Corporate Profits

• Net Interest

• Rental Income

Front 45

Salaries and wages of workers in the economy paid by the firms and by the government (social insurance and private pension funds)

Back 45

EMPLOYEES' COMPENSATION ( I )

Front 46

Income of unincorporated business

Back 46

PROPRIETORS INCOME

Front 47

Income of corporate business

Back 47

CORPORATE PROFITS

Front 48

Interest paid by businesses

Back 48

NET INTEREST

Front 49

Income received by property owners in the form of rent

Back 49

RENTAL INCOME

Front 50

It is the consumption of existing capital stock

Back 50

DEPRECIATION (IA)

Front 51

Payments made by the government for which it receives no goods and services in return

Back 51

SUBSIDIES

Front 52

Measure the difference between earnings of Philippine residents in other countries and foreign residents in the Philippines

Back 52

NET FACTOR INCOME ( IA )

Front 53

Earnings of the Philippine residents regardless of where the income is earned

Back 53

NET FACTOR INCOME

Front 54

Business transfer payments and the statistical discrepancies

Back 54

OTHER

Front 55

Deducted from corporate profits and are not included as income elsewhere

Back 55

BUSINESS TRANSFER PAYMENTS

Front 56

Adjusts for errors in the data collection

Back 56

STATISTICAL DISCREPANCIES