Chapter 4 Macro

  1. what is GDP?
    • Gross domestic product (GDP) can be defined as total
    • market value of all final goods and services produced within a country in a given time period.
  2. How do you calculate GDP?
    • •  GDP may be calculated by summing total
    • expenditures on all final output, or by summing the incomes derived from the production of that output.

    • •  By the income approach, GDP is calculated as the sum of wages, salaries and supplements, gross operating surpluses, gross mixed income and indirect taxes less
    • subsidies.
  3. What is real GDP
    Real GDP is when you compare the GDP against a base to see the difference in price (inflation, deflation) over the years.
  4. What is BOP
    Balance of payments is a record of one countries transactions with all other countries during a specific time frame.  This is just another economic indicator of a country's relative value and, along with all other indicators, should be used with caution. The BOP includes the trade balance, foreign investments and investments by foreigners.
  5. what are the two basic subcategories of BOP accounts:
    • - current account—(income and goods and services)
    • - capitaland financial accounts (includes direct investments and portfolio investments and financial derivitives)
Card Set
Chapter 4 Macro