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22 Cards in this Set
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national income accounting
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consists of concepts that enable those who use them to measure the economies output to compare it with past outputs to explain its size and the reasons for change in its size and to formulate policies designed to increase it
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gross domestic product GDP
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the market value of all final goods and services produced in the domestic economy during the year is measured
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final goods
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consumption goods capital goods and services purchased by final users and that will not be resold or processed further during the current year
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intermediate goods
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ones that are purchased for resale or further processing
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multiple counting
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of the goods and overstate GDP
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value added
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at each stage of the production process
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expenditures approach
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requires the summation of the total amounts of the four types of spending for final goods and services
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personal consumption expenditures
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are the expenditures of household for durable goods and nondurable goods and for services
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Gross private domestic investment
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is the sum of the spending by business firms for machinery, equipment, and tools, spending by firms and households for new construction and the changes in the inventories of business firms.
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government purchases
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are the expenditures made by all levels of governments for final goods from businesses, and for the direct purchases of resources including labor.
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net exports (Xn)
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in an economy is calculated as the difference between exports and imports it is equal to the expenditures made by foreigners for goods and services produced in the economy minus the expenditures made by the consumers, governments, and investors of the economy for goods services produced in foreign nations.
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C+Ig+G+Xn= GDP
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C=personal consumption
I= gross private domestic investmet G= are the expenditures made by all levels of government Xn= in an economy is calculated as the difference between exports |
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income approach
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requires adding the income derived from the production and sales of final goods and services.
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Taxes on production and imports
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are added because they are initially income for households that later gets paid to government in the form of taxes .
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consumption of fixed capital
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is added to national income to get GDP because it is a cost of production that doe not add to anyones income
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Net domestic product
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is the annual output of final goods and services over and above the privately and publicly owned capital goods worn out during the year
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national income
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is the total income earned by US owners of land and capital and by the US suppliers of labor and entrepreneurial ability during the year plus taxes on production and imports
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personal income
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is the total income received whether it is earned or unearned
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disposable income
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is the total income available to households after the payment of personal taxes
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nominal GDP
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is the total output of final goods and services produced by an economy in one year multiplied by the market prices when they were produced.
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real gdp
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to account for these price changes
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price index
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the price of a market basket in a given year
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