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29 Cards in this Set

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Microecon.
Study of how households and firms make choices, how they interact in markets, and how the gov atempts to influence their choices
Macroecon.
the economy as a whole, including topics such as inflation, unemployment, and economic growth
Business cycle
Alternating periods of economic expansion and economic recession
Expansion
The period of a business cycle during which total production and total employment are increasing
Reccession
The period of a business cycle during which total production and total employment are decreasing
Economic growth
the ability of an economy to produce increasing quantities of goods and services.
Inflation rate
the % increase in the price level from one year to the next
GDP
The market value of all final goods and services produced in a country during a period of time
Measuring Total production GDP
GDP is measured using market values, not quantities

GDP includes the market values of only final goods

GDP only uses current production
Final good or service
A good or service purchased by a final user
Intermediate good or services
A good or service that is an input into another good or service, such as a tire on a truck
Calculating GDP
Quantity * price per unit
Transfer Payments
payments by the government to individuals for which good or service in return
Components of GDP
Investment
Government Purchases
Consumption
Net Exports
Personal Consumtpion Expendditures or consumption
Spending by households on goods and services, not including spending on new houses
Gross Private domestic investments or investment
spending by firms on new factories, office buildings, machinery, and inventories, and spending by households on new houses.
Government purchases
spending by federal state and local governments on goods and services
Net Exports
Exports minus imports
Equation of GDP for some actual values
Y=C+I+G+NE
Value added
The market value a firm adds to a prduct
Household production
goods and services people produce for themselves
Underground economy
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
shortcomings in GDP as a well being
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
Real GDP
The value of the final goods and services evaluated at base year prices
Nominal GDP
The value of final goods and services evaluated at current year prices.
Calculating real gdp
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
price level
a measure of the average prices of goods and services in the economy
GDP Deflator
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
Other Measures of Total Production and Total Income
Gross National Product- GNP
Net National Product-NNP
National Income
Personal Income
Disposable Personal Income