Term
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Definition
| the market value of all final goods and services produced within a country in a given period of time |
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Term
| What does GDP measure? (2) |
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Definition
1. the total income of everyone in the economy
2. total expenditures (total income) on the economy's output of goods and services |
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Term
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Definition
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Term
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Definition
1. Explores short-run fluctuations in the business cycle
- change from last year to this year
2. Show/compare standards of living
- US vs other countries
3. Explores long-run economic growth |
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Term
| What does market value mean? |
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Definition
| all goods are measured in the same units |
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Term
| What does final goods mean? |
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Definition
| intended for the end user |
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Term
| What does intermediate good means? |
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Definition
used as components or ingredients in the production of other goods
- excluded from GDP |
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Term
| What does goods and services mean? |
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Definition
| includes tangible goods and intangible services |
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Term
| What does produced within a country mean? |
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Definition
-GDP includes currently produced goods (this years)
-exported goods are included in GDP, not imported |
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Term
| What does "in a given period of time" mean? |
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Definition
| Usually a year or a quarter (3 months) |
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Term
| Are financial transactions included in GDP? |
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Definition
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Term
| What is included in financial transactions? |
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Definition
1. public transfer payments
- welfare and social security
- inheritances
- stocks and bonds |
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Term
| Are secondhand sales included in GDP? |
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Definition
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Term
| Are items produced in a previous year included in GDP? |
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Definition
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Term
| What are the 4 components of GDP? |
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Definition
1. Consumption
2. Investment
3. Government purchases
4. Net Exports |
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Term
| An example of a good in the category Consumption |
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Definition
| - any goods and services that you purchase for your home |
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Term
| An example of consumption for renters |
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Definition
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Term
| An example of consumption for homeowners |
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Definition
| The opportunity cost of renting their own home |
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Term
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Definition
- spending on capital equipment
- spending on construction (new houses)
- spending on inventories |
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Term
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Definition
| the total spending on goods that will be used in the future to produce more goods |
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Term
| What is "Government purchases" |
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Definition
| all spending on goods and services purchased by the government at the Federal, State or local levels |
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Term
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Definition
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Term
Debbie spends $200 to buy her husband dinner at the finest restaurant in Boston
A. Consumption
B. Investment
C. Government Spending
D. Net Exports
E. Net Exports and Consumption |
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Definition
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Term
Sarah spends $1,800 on a new laptop to use in her publishing business. The laptop was built in China
A. Consumption
B. Investment
C. Government Spending
D. Net Exports
E. Net Exports and Investment (don’t want to count it in production) |
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Definition
| net exports and investment |
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Term
Jane spends $1,200 on a computer to use in her editing business. She got last year’s model on sale for a great price.
A. Investment
B. Government Spending
C. Net Exports
D. Net Exports and Investment
E. No Effect |
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Definition
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Term
General Motors builds $500 million worth of cars, but consumers buy only $470 million worth of them
A Consumption
B. Investment
C. Government Spending
D. Net Exports
E. Consumption and Investment |
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Definition
| Consumption and Investment |
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Term
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Definition
- values output using current prices
- not correct for inflation |
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Term
| Is nominal GDP corrected for inflation? |
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Definition
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Term
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Definition
- values output using the prices of a base year
- correct for inflation |
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Term
| Is real GDP corrected for inflation? |
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Definition
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Term
| What does nominal GDP reflect? |
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Definition
| the change in both prices and quantities (output) |
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Term
| What does Real GDP reflect? |
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Definition
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Term
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Definition
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Term
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Definition
1. non market goods
2. underground economy
3. quality of the environment
4. leisure time |
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Term
| What is an important goal for many countries? |
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Definition
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Term
| What is GDP Growth? (economic growth) |
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Definition
| increase in Real GDP over some time period |
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Term
| The equation for how long will it take an economy's GDP to double? (Rule of 70) |
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Definition
| approximate # of yrs required to double real GDP = 70 / annual percentage rate of growth |
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Term
| Suppose the United States has a current growth rate of 2 percent. How long will it take the U.S. economy to double? |
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Definition
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Term
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Definition
1. supply factors
2. demand factors
3. efficiency factors |
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Term
| Supply Factors of Growth (4) |
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Definition
1. increases in quantity and quality of natural resources
2. increases in quantity and quality of human resources
3. increases in the supply of capital goods
4. improvement of technologies |
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Term
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Definition
| Households, businesses, and governments must purchase the economy's expanding output |
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Term
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Definition
| Must achieve efficiency and full employment |
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Term
| Structures that promote growth (5) |
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Definition
1. strong property rights
2. patents and copyrights
3. efficient financial institutions
4. free trade
4. competitive market systems |
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