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11 Cards in this Set
- Front
- Back
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Gross Domestic Product
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The total value of all new and FINAL goods and services produced in a country during a given year
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Gross National Product
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total value of all new and FINAL goods and services produced in a country during a given year in American companies
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Gross Domestic Product (GDP) or Gross National Product (GNP)?
WHY? |
Gross Domestic Product because a lot of American companies were leaving the market for three reasons, so we had to include other countries as well
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Three reasons why American companies were leaving
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1. TAXES - almost all countries offer a 25 yr. abeitment, while in the U.S. you pay taxes over 3 months
2. ENVIRONMENTAL RESTRICTIONS - OCEA (business shuts down for 3 days if someone gets their finger cut off. In Mexico, this doesn't happen. Company keeps running.) 3. PRODUCTION COST - Americans get $20 per hr, while Mexicans get $4 a day |
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Where does GDP data come from?
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Beauro of Economic Analysis.
This consists of 19 people collecting information on 16 trillion dollar economy. They send out a survey to 25,000 businesses when there are really 25 million. 1/1000 of lal businesses. They ask: What did you sell? What did you produce? What is your inventory? They take monthly data and publish it quarterly. |
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Why do we use GDP?
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1. To measure economic growth, or the lack thereof.
2. To measure the effectiveness of monitary and physcal policy. 3. International purposes (a. UN dues b. credit line c. contribution to elivibility to borrow from international mmonitary fund) |
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International monetary Fund
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a pool of currencies. 160 members. each mmember contributes it's currency to this fund.
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What are teh two approaches?
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THE INCOME APPROACH
EXPENDATURE APPROACH |
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What is the income approach?
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take the sum of all forms of earned income and factor in earnings.
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What are the nine forms of earned income?
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-dividends
-rent -wage -salary -interest -profit -tips -comission |
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What is the Expendature approach?
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category 1: consumer spending - 70% of GDP is heavily towards consumer. includes every dollar spent by the consumer in equal markets
category 2: gross private domestic investment acounds for 16% of GDP. Includes purchase by businesses of all new capital goods, all new construction, and net change in business inventorys |
