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13 Cards in this Set
- Front
- Back
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What is Microeconomics?
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It is the global view of the economy.
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Describe the Circulation Flow Model.
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Government is not involved as well as foreign trade. It concerns the Producers and Consumers.
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Leakages include..............?
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Savings,taxes and import goods.
=what you do with your money |
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Injections include..............?
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government spending = what the government does with your leakages.
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What is the flow diagram trying to show you?
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It is trying to describe the total break down of an economy, and the value of an economy.
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What is GDP?
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Gross Domestic Product
value of what a country's output over a year. |
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What is the Expenditure method?
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Consumption+Investments+Government+(Exports-Imports)
finding the total amount of money spent in the economy |
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What is the Output method?
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calculate the total value of all the final goods and services produced.
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What is the Income method?
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sums of rent,wages, interest and profits (total income of the nation)
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Why does the government calculate the GDP?
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1. So the government can keep track of the economy, in particular economic growth.
2. To compare with other countries 3. To plan economic policies 4. To test economic models |
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What are the Limits of GDP?
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1. It does not calculate Illegal activities, Parallel activities, Autarkic Activities
2. It is just an average, not exact 3. Does not include Social Costs or Benefits |
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What is the Government's Goals?
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1. Reduce taxes
2. Give out merit goods(social benefits)+ public goods 3. Keep unemployment low 4. Transfer money to the poor= transfer incomes 5. Keep inflation Low 6. Keep a healthy balance of trade |
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What tools can the government use to reach their goals?
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1. Fiscal Policy= government spending increases
2. Monetary Policy= Interest Rate increases 3. Supply-Side Policy= lower taxes+subsidize industry+ grants for trading |
