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29 Cards in this Set
- Front
- Back
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Microecon.
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Study of how households and firms make choices, how they interact in markets, and how the gov atempts to influence their choices
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Macroecon.
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the economy as a whole, including topics such as inflation, unemployment, and economic growth
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Business cycle
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Alternating periods of economic expansion and economic recession
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Expansion
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The period of a business cycle during which total production and total employment are increasing
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Reccession
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The period of a business cycle during which total production and total employment are decreasing
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Economic growth
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the ability of an economy to produce increasing quantities of goods and services.
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Inflation rate
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the % increase in the price level from one year to the next
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GDP
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The market value of all final goods and services produced in a country during a period of time
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Measuring Total production GDP
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GDP is measured using market values, not quantities
GDP includes the market values of only final goods GDP only uses current production |
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Final good or service
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A good or service purchased by a final user
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Intermediate good or services
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A good or service that is an input into another good or service, such as a tire on a truck
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Calculating GDP
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Quantity * price per unit
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Transfer Payments
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payments by the government to individuals for which good or service in return
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Components of GDP
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Investment
Government Purchases Consumption Net Exports |
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Personal Consumtpion Expendditures or consumption
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Spending by households on goods and services, not including spending on new houses
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Gross Private domestic investments or investment
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spending by firms on new factories, office buildings, machinery, and inventories, and spending by households on new houses.
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Government purchases
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spending by federal state and local governments on goods and services
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Net Exports
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Exports minus imports
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Equation of GDP for some actual values
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Y=C+I+G+NE
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Value added
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The market value a firm adds to a prduct
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Household production
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goods and services people produce for themselves
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Underground economy
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buying and sellling of goods and services that is concealed from the gov to avoid taxes or regulation or because the goods and services are illegal
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shortcomings in GDP as a well being
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the value of leisure is not included in GDP
GDP is not effective for pollution or other negative effects of production GDP is not adjusted for change in crime or other social problems |
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Real GDP
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The value of the final goods and services evaluated at base year prices
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Nominal GDP
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The value of final goods and services evaluated at current year prices.
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Calculating real gdp
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1. Calculate the value of the goods and services listed using the quantities for a yerar and the prices for the base year
2. Add up the values for the products to find real GDP |
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price level
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a measure of the average prices of goods and services in the economy
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GDP Deflator
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a measure of the price level, calculated by dividing nominal GDP by real GDP, and multiplying by 100
GDP Deflator= (Nominal GDP/Real GDP)* 100 |
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Other Measures of Total Production and Total Income
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Gross National Product- GNP
Net National Product-NNP National Income Personal Income Disposable Personal Income |
