Chapter Six Macroeconomics
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35 terms
English | Math / Symbols |
|---|---|
 National Income Accounting | What economists use to evaluate the state of the economy, track the long-run course of the economy, and formulate effective policy |
| Gross Domestic Product | The total market value of all final goods and services produced in a given year. Includes all goods with in a country regardless of where resources came from. |
| Multiple Counting | Counting both final and intermediate goods within the GDP, causes distortion of GDP value. |
| Value Added | Market Value of a firm's output minus the the value of the inputs the firm has bought from others |
| Non-Production Transactions | Financial Transactions and Second-Hand Sales, which are both excluded from GDP calculations |
| Financial Transactions | Public Transfer Payments, Private Transfer Payments an Stock Market Transactions |
| Public Transfer Payments | Social security benefits, welfare payments and veterans' payments. Since recipients contrbute nothing to production, it would overstate GDP |
| Private Transfer Payments | Money given as gifts. No output is produces, funds are merely being transfered, so they aren't included in GDP. |
| Stock Market Transactions | Not included in GDP since no output is produced, only bits of paper are being swapped |
| Secondhand Sales | Sales of used goods, not included in GDP |
| Expendatures approach to GDP calculation | GDP = C + Ig + G + Xn |
| C in GDP Calculation | Personal Consumption Expendatures |
| Ig in GDP Calculation | Gross Private Domestic Investment |
| G in GDP Calculation | Govenment Purchases |
| Xn in GDP Calculations | Net Exports |
| Personal Consumption Expenditures | All expenditures on holdhold for durable and non-durable goods and services |
| Gross Private Domestic Investment | All final purches of machinery, equiptment, and tools, all constuction, and changes in inventories |
| Net Investment | Gross investment minus depriciation |
| Net Investment Positive? | Growth of Private Capital |
| Net Investment Negative? | Shrinking of Private Capital |
| Net Investment 0? | No Change in Private Capital |
| Government Purchases | Expendatures for public services and social capital |
| Net Exports | Exports minus Imports |
| National Income | Employee Compensation + Rents + Interest +Proprietors' Income + Corporate Profits + Taxes On Products and Imports |
| Income Approach to GDP Calculation | National Income + Net Foreign Factor Income + Statistical Discrepancy + Consumption of Fixed Capital |
| Net Domestic Product | GDP - consumption of fixed capital |
| National Income | Net Domestic Product - Statistical Discrepancy + Net Froeign Factor Income |
| Personal Income | National Income - Taxes on products and imports - Social Security Contributions - Corporate income taxes - Undistributed corporate profits + Transfer Payments |
| Disposable Income | Personal Income - Personal Taxes |
| Nominal GDP | Unadjusted GDP (in today's currency) |
| Real GDP | GDP which has been adjusted for Inflation |
| Price Index | Price of goods in a given year in comparison to price of goods in a set reference year |
| Price Index Equation (in integers) | (Specific Year Price) / (Base Year Price) * 100 |
| Price Index Equation (in hundreths) | (Nominal GDP) / (Real GDP) |
| Shortcomings of GDP | Nonmarket Activities, Leisure, Improved Product Quality and the Underground Economy |
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