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Econ Ch. 15 A Nation's Income (GDP)

Terms in this set (12)

Macroeconomics
the study of economy-wide phenomena, including inflation, unemployment, and economic growth
What does GDP measure?
-total income of everyone in economy and total expenditure on the economy's output of good's and services
-Income must = expenditure
GDP
-gross domestic product
-the market value of all final goods and services produced WITHIN A COUNTRY IN A GIVEN PERIOD OF TIME
Y= C+I+G+NX
GDP=
-consumption
-investment
-government purchases
-net exports (exports-imports)
Consumption
-spending by households of goods and services, with the exception of purchases of new housing
Investment
-spending on capital equipment, inventories, structures, including household purchases of new housing
-purchase of goods that will be used in the future to produce more goods and services
Govt Purchases
-spending on goods and services by local, state, and federal govt
-salaries of govt workers and expenditures of public work
-transfer payments for social security and unemployment NOT included
Net Exports
-spending on domestically produced goods by foreigners (exports) minus spending on foreign goods by domestic residents (imports)
Real GDP
-shows how economy's overall production of goods and services changes over time
-the production of goods and services valued at constant prices
-begin with a base year for the prices and multiply by quantities, then add like nominal GDP
Nominal GDP
-production of goods and services valued at current prices
-multiply quantities in that year by prices and add
GDP Deflator
Nominal GDP/Real GDP x 100
Inflation Rate
Inflation rate in 2 years=GDP deflator in yr 1-GDP deflator in yr 2/GDP deflator in yr 1 X100
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