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28 Cards in this Set

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Expediture Approach to GDP
A methoc of calculating GDP by adding spening on all final goods and services produced in the nation during the year
Income Approach to GDP
A methoc of calculating GDP by adding all payments for resources used to produce output in the nation during th year
Final Goods and Services
Goods and servies sold to final or end users
Intermediate Goods nad Services
Goods and services purchases by firms for further reprocessing and resale
Double counting
The mistake of including th value of intermediate goods plus the value of final goods in GDP
Consumption
Household purchases of final goods and services except for new residences, which count as investments
Investment
The purchase of new plants, new equipment, new building, and new residences, plus net additions to inventories
Physical Capital
Manufactured items used to produces goods and services; incluces new plants and new equipment
Residential Construction
Building new homes or dwelling places
Inventories
Producers' stocks of finished and in-process goods
Government Purchases
Spending for goods and services by all levels of gov; gov outlays minus transfer payments
Net Exports
The value of a country's exports minus the value of its imports
Aggregate Expenditure
Total spending on final goods and services during a given period, usually a year
Aggregate Income
The sume of all income earned by resource suppliers in an economy during a given period
Value Added
The difference at each stage of production between the selling price of a product and the cost of intermediate goods purchsed from other firms
Disposable Income (DI)
The income households have available to spend or to save after prying taxes and recieving transfer payments
Net Taxes (NT)
Taxes minus transfer payments
Financial Markets
Banks and other financial instiutions that facilitate the flow of funds from savers to borrowers
Leakage
Any diverse income from the domestic spending stream; includes saaving, taxes, and imports
Injection
Any spending other than by households or any income other than from resource earings; includes investment, gov purchses, exports, and transfer payments
Base Year
The year with which other years are compared when constructin an index
Price Index
A nuber that shows the average price of goods
Consumer Price Index or CPI
A measure of inlfation besed on the cost of a fixed market basket of goods and services
Two ways to measure GDP
Income and Expenditure
Formula for measuring GDP income
Dispoable Income (DI) = GDP-NT (Net taxes)
Formula for studying GDP expenditure
I+G+X=S+NT+M
(Investments+Government+Exports = Savings+Net Taxes+Imports)
Injections=Leakages
Three things that limit the measure of GDP
1. Some productio not counted
2. Underground Economy
3. Quality, Variety
Formula to get from GDP to Disposable Income
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