ch 5 Macroeconomics

  1. Gross Domestic Product DGP
    The market value of all final goods and services produced in a nation during a period of time, usually a year.
  2. Transfer Payment
    A goverment payment to individuals not it exchange for goods or sercives currently produced.
  3. Final goods
    Finished goods and services produced for the ultimate user.
  4. Intermediate goods
    Goods and services used as inputs for the production of final goods
  5. Flow
    A flow is the rate of change in a quantity during a given time period, such as dollars per year. For example, income and consumptios are flows that accour per week, per month, or per year.
  6. Stock
    A quantity measured at one point in time. For example, an inventory of goods or the amount of money in a checking account.
  7. Expenditure approach
    The national income accounting method that measures GDP by adding all the spending for final goods during a period of time.
  8. Expenditure approach accounts
    • Personal Consumption expenditures (C)
    • Gross private domestic investment (I)
    • Gov consumption expenditues and gross investment (G)
    • Net exports of goods and services (X - M)
    • Formula: GDP = C+I+G+(X-M)
  9. Income Approach
    The national income accounting method that measures GDP by adding all incomes, including compensations of employees, rents, net interest and profits.
  10. Income Approach accounts
    • Compensations of employees
    • Rental Income
    • Profits
    • Net Interest
    • Indirect Business Taxes
    • Depreciation
  11. Indirect business Taxes
    Taxes levied as a % of the prices of goods sold and therefore collected as part of the firm's revenue. Firms treat such taxes as production cost. Example include general taxes, excise taxes, and costoms duties.
  12. The Underground Economy
    Illegal gambling, prostitution, loan-sharking, illegal guns, illegal drugs are examples af underground economy
  13. National Income
    The total income earned by resources owners, including wages, rents, interest and profits. NI is calculated as GDP minus depreciation of the capital worn out in producing output.
  14. Persoal Income (PI)
    The total income received by households that is available for consumption, savings, and payment of personal taxes.
  15. Disposable personal income (DI)
    The amount of income that housholds actually have to spend or save after payment of personal taxes.
  16. Nominal GDP
    The value all final goods based on the prices existing during the time period of production.
  17. Real GDP
    The value of all final goods produced during a given time period based on the priced existing in a selected base year.
  18. GDP chain price index
    A measures that compares changes in the prices of all final goods during a given year to the prices of those goods in a base year.
Card Set
ch 5 Macroeconomics