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18 terms

Macro Economics

STUDY
PLAY
In a free market the equalibrium price will be acceptable to both
Consumers and supliers
GDP
Gross Domestic Product- the total market value of all final goods and services produced annually in an economy
GDP calculation
= C+I+G+(X-M)
Investment
Expenditures on (production of) new plant, equipment, and structures (capital) in a given time period, plus changes in business inventories. Such as constuction
Government Spending
G = Government Spending (or purchases) - all goods and services bought by government. Excludes transfer statments and interest on debt
Change in inventories is how
you determine if you are going in our out of a resicion
United States has
twice the GDP as China per polulation
US government spending
has increased as a porportion of GDP spikes in World War I and II
US government insurance recipients
increase when there is a resescion
Deficit
Amount of money spent OVER the amount collected over a one year period.
Debt
(see liabilities) - are amounts owed by the business and represent amounts that individuals or organizations have lent to the business.
GDP Deflator
100 X (nominal GDP/real GDP)
Causes of Inflation
Market Power ability t assume competitave presseure
Causes of Inflation
Demand pull- ris ein demand is relative to supply
Causes of Inflation
Boom in Asset Maret- increaed demand for tangible itemss
Causes of Inflation
Supply Shock when like a hurricane destory much of the supply
Inflation is good
good for borrowers and the government becuase the value of the debt is reduced
Cpi Equation
CPI = (updated/base) * 100