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42 Cards in this Set
- Front
- Back
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National Income Accounting
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*measuring the overall economys output (production) and its income
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Gross Domestic Product
(GDP) |
*total dollar value of all final goods and services
**always given in a $ value **only FINAL goods and services **only NEW goods. |
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4 factors of computing GDP
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1. (71%) consumer section -C
2. (17%) investment sector- I 3. (18.8%)government sector-G 4. (-6.8%) Net exports-X |
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Why is the net exports a negative number??
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*because we import more than we export.
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GDP per capita
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GDP for a given year divided by the popution of a given country.
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3 measurements of Income
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1. National income- NI
2. Personal income- PI 3. Disposable personal income- DPI |
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Inflation
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*Prolonged rise in the general price leve of final goods and services
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Purchasing power
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the real goods and services that money can buy, determines the value of money
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deflation
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prolonged decline in the general price level of goods and services
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Consumer price index (CPI)
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A statistical measure of the average of prices of a specified set of goods and service purchased by typical consumer in city area.
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market basket
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*representative group of goods and services used to compile the consumer price index
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Producer price index (PPI)
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*measure of the change in price over time that U.S. producers charge for their goods and services.
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GDPprice deflator
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Price index that removes the effect of inflation from GDP so that the overall economy in one year can be compared to another year.
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Aggregates
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summation of all the individual parts in the economy
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aggregate demand
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the total of all planned expenditures in the entire economy
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aggregate demand curve
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a graphed line showing the relationship between the aggregate quantity demanded and the average of all prices as measured by the implicit GDP price delfator
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Money satisfies
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1. medium of exchange
2. unit of accounting 3. store of value |
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medium of exchange
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*seelers willing to accept it in exchange for a good or service.
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barter
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* exchange of goods or services for a different good or service.
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Unit of Accounting
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*use of money allows us to compare the value of goods and services to other businesses and countries.
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Store of Value
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Use of money to store purchasing power for later use
*you can save it |
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Characteristics of Money
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1. durable
2. portable 3. divisibile 4. stable in value 5. scarce 6. accepted |
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3 types of money
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1. commodity
2. representative 3. fiat money |
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commodity money
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*goods that have value aside from money
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Representative Money
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backed by an item of value
example: gold or silver |
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fiat Money
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*government Order
legal tender |
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Types of Money
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1. currency
2. checking accounts 3. credit card |
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Near Moneys
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*assets such as savings accounts, that can be turned into money relatively easy and without the risk of loss of value
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The money supply
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the amount of "money" in the United States
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M1
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all currency and checkable deposits, and travelers checks
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M2
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Includes all of M1 and near moneys such as savings accounts small denomination time deposits, money market accounts
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Economic indicators
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check on economy and make predictions
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GDP formula
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C+I+G+x
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GDP Price deflator
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*price index that removes the effect of inflation from GDP so that the overall economy in one year can be compared to another year.
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Real GDP
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GDP that has been adjusted for inflation by applying the price deflator
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Producer Price Index
PPI |
measure of the change in price over time that U.S. producers charge for their goods and services
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aggregates
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*summation of all the individual parts in the economy
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aggregate demand
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the total of all planned expenditures in the entire economy
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aggregate demand curve
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graphed line showing the relationship between the aggregate quantity demanded and the average of all prices as measured by the implicit GDP price deflator.
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aggregate supply
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real domestic output of producers based on the rise and fall of the price level.
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aggregate supply curve
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graphed line showing the relationship between the aggregate quanitity supplied and the average of all prices as measured by the implicit GDP price deflator
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Business Cycle
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1. peak or boom
2. contraction 3. recession 4. depression 5. trough 6. expansion 7. recovery |
