Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
26 Cards in this Set
- Front
- Back
|
GDP
|
market value of all final good and services produced w/in a country in a given period of time
|
|
|
factors of production
|
what you need to produce something (labor, capital, natural resources)
|
|
|
intermediate goods
|
used as components or ingredients in production of other goods
|
|
|
final goods
|
intended for user
|
|
|
What makes up GDP?
|
measured within geographic territory, doesn't matter who is producing
|
|
|
What makes up GNP?
|
gross ntl. product- whatever citizens of a country produce, geography doesn't matter
|
|
|
income expediture identity
|
Y= C + I + G + NX
|
|
|
C
|
Consumption
|
|
|
G
|
gov. purchases
|
|
|
I
|
investment
|
|
|
NX
|
net exports (exports- imports)
|
|
|
transfer payments
|
payments made by gov. to households
|
|
|
nominal GDP
|
values output using current prices
|
|
|
Real GDP
|
values output using prices of base year
|
|
|
GDP deflator formula
|
100 X (nominal GDP/ real GDP)----- measure of overall level of prices
|
|
|
inflation rate formula
|
100 X ((GDP deflator last year- GDP deflator this year)/ GDP deflator this year)
|
|
|
CPI
|
measure of overall cost of goods and services bought by typical consumer
|
|
|
5 steps to calculate CPI
|
1. fix the basket
2. find prices 3. compute total basket cost 4. choose base yr. and compute index 5. compute inflation rate |
|
|
inflation rate formula
|
100 X ((CPI this year- CPI last year)/CPI last year)
|
|
|
CPI formula
|
100 X (cost of basket in current year/ cost of basket in base year)
|
|
|
substitution bias
|
consumers substitute towards goods that become relatively cheaper
|
|
|
Correcting variables for inflation formula
|
Amount in year T dollars X (CPI today/ CPI in year T)
|
|
|
indexation
|
a dollar amount is indexed for inflation if it's automatically corrected for inflation by law or in contract
|
|
|
real interest rate formula
|
nominal interest rate- inflation rate
|
|
|
nominal interest rate
|
not corrected for inflation, rate of growth of your dollar in a deposit or debt
|
|
|
real interest rate
|
corrected for inflation, rate of growth of the purchasing power of a deposit or debt
|
