Macroeconomics Chapter 22

Front 1

Expediture Approach to GDP

Back 1

A methoc of calculating GDP by adding spening on all final goods and services produced in the nation during the year

Front 2

Income Approach to GDP

Back 2

A methoc of calculating GDP by adding all payments for resources used to produce output in the nation during th year

Front 3

Final Goods and Services

Back 3

Goods and servies sold to final or end users

Front 4

Intermediate Goods nad Services

Back 4

Goods and services purchases by firms for further reprocessing and resale

Front 5

Double counting

Back 5

The mistake of including th value of intermediate goods plus the value of final goods in GDP

Front 6

Consumption

Back 6

Household purchases of final goods and services except for new residences, which count as investments

Front 7

Investment

Back 7

The purchase of new plants, new equipment, new building, and new residences, plus net additions to inventories

Front 8

Physical Capital

Back 8

Manufactured items used to produces goods and services; incluces new plants and new equipment

Front 9

Residential Construction

Back 9

Building new homes or dwelling places

Front 10

Inventories

Back 10

Producers' stocks of finished and in-process goods

Front 11

Government Purchases

Back 11

Spending for goods and services by all levels of gov; gov outlays minus transfer payments

Front 12

Net Exports

Back 12

The value of a country's exports minus the value of its imports

Front 13

Aggregate Expenditure

Back 13

Total spending on final goods and services during a given period, usually a year

Front 14

Aggregate Income

Back 14

The sume of all income earned by resource suppliers in an economy during a given period

Front 15

Value Added

Back 15

The difference at each stage of production between the selling price of a product and the cost of intermediate goods purchsed from other firms

Front 16

Disposable Income (DI)

Back 16

The income households have available to spend or to save after prying taxes and recieving transfer payments

Front 17

Net Taxes (NT)

Back 17

Taxes minus transfer payments

Front 18

Financial Markets

Back 18

Banks and other financial instiutions that facilitate the flow of funds from savers to borrowers

Front 19

Leakage

Back 19

Any diverse income from the domestic spending stream; includes saaving, taxes, and imports

Front 20

Injection

Back 20

Any spending other than by households or any income other than from resource earings; includes investment, gov purchses, exports, and transfer payments

Front 21

Base Year

Back 21

The year with which other years are compared when constructin an index

Front 22

Price Index

Back 22

A nuber that shows the average price of goods

Front 23

Consumer Price Index or CPI

Back 23

A measure of inlfation besed on the cost of a fixed market basket of goods and services

Front 24

Two ways to measure GDP

Back 24

Income and Expenditure

Front 25

Formula for measuring GDP income

Back 25

Dispoable Income (DI) = GDP-NT (Net taxes)

Front 26

Formula for studying GDP expenditure

Back 26

I+G+X=S+NT+M
(Investments+Government+Exports = Savings+Net Taxes+Imports)
Injections=Leakages

Front 27

Three things that limit the measure of GDP

Back 27

1. Some productio not counted
2. Underground Economy
3. Quality, Variety

Front 28

Formula to get from GDP to Disposable Income

Back 28

GDP-Depreciation=Net Domestic Product+Earning from US overseas=National Income-Income earned but not recieved+Income recieved but not earned=Personal Income-Personal Income Taxes=Disposable Income