Chapter 11 Flashcards Preview

Macro Economics > Chapter 11 > Flashcards

Flashcards in Chapter 11 Deck (17)
Loading flashcards...
1
Q

What is gross domestic product?

A

This is also called GDP and it is “The market value of all final goods and services produced in an economy during a period of time (a year)

2
Q

What is a final good or service?

A

This is a good that has reached the hands of the final consumer

3
Q

In order to measure GDP what three things are required??

A
  1. Use market values and net quantity. In this case market value refers to the dollar value or monetary value for each good and service
  2. Use only the FINAL goods and sercies to avoid double counting
  3. Use only the goods and service produced with the period considered
4
Q

Draw a circular flow diagram

A
5
Q

What are wages?

A

Payment for labor

6
Q

What is interest?

A

Payment for financial capital

7
Q

Rent

A

Paying for land

8
Q

What is profit?

A

Payment for enteurpeurship

9
Q

What is Transfer Payments (TP)?

A

Something that is made by the government to households but not for goods and services sold.

10
Q

What is the equation for calculating GDP (in a local encomy)?

A

GDP=(Conumption)+(Investment)+(Government Expentidures)+(Net Exports)

i.e:

Y=C+I+G+NX

11
Q

In terms of GDP define consumption?

A

Household spending on goods and services excluding payment for new houses or homes

12
Q

In terms of GDP what is investment?

A

Firms spending on equipmetn tools and machine, including house hold spending on new homes

13
Q

In terms of GDP what’s an Government Expenditure?

A

Federal state and local goverment spednign on goods and services

14
Q

How do you find your net export?

A

(Exports)-(Imports)

15
Q

What is the value added method?

A

This refers to additional value a firm gives a product.

It is the difference between teh price the firm sells the good for and the price the firm paid for the intermiate good used to produce the good.

16
Q
  • Consumption=9269
  • Investment=2213
  • Government Ex=2528
  • Exports=1466
  • Imports=222

What is the GDP based on the above information?

A

15,254

17
Q
A