Questions and Answers
What is the definition of Macroeconomics?
What does the Circular flow of income model illustrate?
What are leakages in the context of macroeconomics?
Income received by households that is not used to finance domestic goods and services.
What are injections?
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How are savings defined in macroeconomics?
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What is a transfer payment?
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What is national income?
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What does Gross Domestic Product (GDP) represent?
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Define Gross National Product (GNP) or Gross National Income (GNI).
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What is Net National Product (NNP) or Net National Income (NNI)?
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What is nominal GDP?
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What is real GDP?
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Define per capita GDP.
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What is Green GDP?
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What does economic growth entail?
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What is economic development?
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What is the Human Development Index (HDI)?
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What is the business cycle?
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What defines a recession?
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What is aggregate demand?
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How is consumption defined in macroeconomics?
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Define investment in macroeconomic terms.
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Study Notes
Macroeconomics Overview
- Macroeconomics studies aggregate economic activity, focusing on the economy's overall functioning.
Circular Flow of Income
- A simplified economic model illustrating the monetary flow throughout the economy.
Leakages
- Income that households receive but do not spend on domestic goods and services, including taxes, savings, and imports.
Injections
- Income for firms that originates outside household spending, such as government expenditures, investments, and export revenue.
Savings
- Income that is stored rather than spent; categorized as a leakage from the circular flow of income.
Transfer Payments
- Payments received without a corresponding productive service, leading to no increase in output, e.g., pensions and unemployment benefits.
National Income
- The total value of final goods and services produced within an economy over a specified period, typically one year.
Gross Domestic Product (GDP)
- Represents the total monetary value of all final goods and services produced in a country annually; expressed as GDP = C + I + G + (X - M).
Gross National Product/Income (GNP/GNI)
- Total value of all final goods and services produced in a year plus net property income from abroad.
Net National Product/Income (NNP/NNI)
- Total value of goods and services produced in a year, plus net property income from abroad, minus depreciation.
Nominal GDP
- The monetary value of all goods and services produced in a year, unadjusted for inflation.
Real GDP
- The monetary value of all goods and services produced in a year, adjusted for inflation.
Per Capita GDP
- Calculated by dividing the total GDP by the population size, providing an average economic output per person.
Green GDP
- GDP measure adjusted for environmental costs associated with production; calculated as GDP minus environmental costs.
Economic Growth
- Refers to the increase in real economic output over time, typically measured by the growth rate of real GDP.
Economic Development
- A multidimensional concept focusing on improved living standards, poverty reduction, enhanced health and education, and increased employment opportunities.
Human Development Index (HDI)
- A composite index reflecting health (life expectancy), education (literacy and school enrolment), and living standards (GDP per capita), scored between 0 and 1.
Business Cycle
- Represents the cyclical fluctuations in economic activity, indicated by changes in real GDP, with stages including boom, peak, recession, trough, and recovery.
Recession
- Defined by two consecutive quarters of negative GDP growth; usually correlated with increased unemployment and lower inflation rates.
Aggregate Demand
- The total spending within the economy for goods and services, calculated as the sum of consumption, investment, government spending, and net exports.
Consumption
- Expenditure by households on domestic goods and services over a specified duration.
Investment
- Spending by businesses to enhance capital stocks, including new factories and machinery.
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Description
This quiz features a series of flashcards designed to help you master key terms in macroeconomics. Each card includes a definition, providing a concise overview of important concepts such as the circular flow of income and leakages. Ideal for quick revision and testing your understanding of macroeconomic principles.