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13 Cards in this Set
- Front
- Back
Components of GDP
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Personal Consumption, gross domestic Investment, Government Purchases, net exports
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GDP Equation
Expenditure Method |
C+I+G+NX
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GDP Value Added Method
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add the market value that each firm adds to a good or service
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Division of Income Method
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measure GDP in terms of total expenditure or as total income received by households. included are: wages, interest, rent, profits, taxes, depreciation, etc.
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Shortcomings of GDP as a measure of total production
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Underground economy, household production (stay at home moms),
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Nominal vs Real GDP
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Nominal GDP - GDP at current valuation of Dollar.
Real GDP - calculating GDP with base year. using base year prices to calculate current prices. lets us see real growth |
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Calculate Real GDP
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Multiply Current year AMOUNT by Base year PRICE
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Gross National Product
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Value of final goods and services produced by residents of US, even if produced outside US.
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Net National Product
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GNP - Depreciation = NNP
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National Income
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National Income will always be smaller than GDP, because of sales tax paid on expenditures.
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GDP Deflator
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Nominal GDP/Real GDP x 100
a measure of the Price Level. |
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Price Level
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measures the avg prices of goods an services in the economy
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Disposable Personal Income
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DPI=Personal Income - Personal Tax Payments
it is the best measure of income that households actually have to spend |