Questions and Answers
What is the definition of gross domestic product?
What is a final good?
A good in the hands of its final user.
What is an intermediate good?
A good that is used as an input in the production of final goods and services.
Double counting refers to counting a good more than once in computing GDP.
Signup and view all the answers
What is a transfer payment?
Signup and view all the answers
What does consumption represent in economics?
Signup and view all the answers
What is meant by investment in macroeconomics?
Signup and view all the answers
What is inventory investment?
Signup and view all the answers
What constitutes fixed investment?
Signup and view all the answers
What are government purchases?
Signup and view all the answers
What are government transfer payments?
Signup and view all the answers
What are imports in macroeconomics?
Signup and view all the answers
What are exports?
Signup and view all the answers
What are net exports?
Signup and view all the answers
What is national income?
Signup and view all the answers
What does capital consumption allowance refer to?
Signup and view all the answers
What is net domestic product (NDP)?
Signup and view all the answers
What is personal income?
Signup and view all the answers
What is disposable income?
Signup and view all the answers
What is real GDP?
Signup and view all the answers
What does economic growth represent?
Signup and view all the answers
What is the business cycle?
Signup and view all the answers
What is expenditure?
Signup and view all the answers
What are non-market goods and services?
Signup and view all the answers
What are underground activities?
Signup and view all the answers
What is meant by sales of used goods in the context of GDP?
Signup and view all the answers
What are financial transactions in GDP calculation?
Signup and view all the answers
What are bads in economics?
Signup and view all the answers
What is per-capita GDP?
Signup and view all the answers
What are durable goods?
Signup and view all the answers
What are nondurable goods?
Signup and view all the answers
What are services in economic terms?
Signup and view all the answers
Match the following components of national income with their descriptions:
Signup and view all the answers
What is the business cycle?
Signup and view all the answers
Study Notes
Gross Domestic Product (GDP)
- Represents the dollar value of all final goods and services produced within a country's borders in a year.
- Excludes transfer payments as they don't reflect production activities.
Final and Intermediate Goods
- Final goods are those in the possession of their ultimate users.
- Intermediate goods serve as inputs in the creation of final goods and services.
Counting Issues in GDP
- Double counting occurs when a good is counted multiple times, leading to inflation of GDP figures.
- The sale of used goods and financial transactions are not included in GDP calculations.
Income and Expenditure Components
- National income comprises compensation of employees, proprietor's income, corporate profits, rental income, and net interest.
- Personal income reflects the amount of income individuals receive after tax deductions, while disposable income indicates what is left for spending and saving.
Types of Investments
- Investment includes the purchase of newly produced capital goods, changes in inventory, and residential housing.
- Fixed investment specifically refers to business expenditures on capital goods like machinery and new housing.
Trade Balances
- Imports refer to domestic spending on foreign goods, while exports represent foreign spending on domestic products.
- Net exports are calculated as exports minus imports, impacting GDP.
Economic Growth and Measurements
- Real GDP adjusts for inflation and represents the true value of output over time, essential for measuring economic growth.
- Economic growth is identified as increases in real GDP, while the business cycle consists of recurrent swings in economic activity.
Types of Goods
- Durable goods have a lifespan of three or more years, such as appliances and furniture.
- Nondurable goods are consumed quickly, including food and clothing. Services are intangible offerings like lawn care and entertainment.
Exclusions from GDP
- Non-market goods and services, underground activities, and bads (such as pollution) are omitted from GDP calculations.
- Capital consumption allowance reflects the depreciation of capital goods over time.
Per-Capita Metrics
- Per-capita GDP divides total GDP by the number of citizens, providing insight into individual economic well-being.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Explore key concepts from Chapter 7 of Macroeconomics with these flashcards. Learn definitions related to gross domestic product, final goods, intermediate goods, and more. Perfect for reinforcing your understanding of economic terms and their applications.