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Cards In This Set
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Gross Domestic Product (GPD)
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Is the current dollar output of all final goods in services, produced within a country in a given year.
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2 ways to calculate a measure GDP
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1.) expenditure appproach
(4 components or parts) 2.)income approach (7 components)
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What are the four components of expenditure approach
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*Consumption Spending (c)
* Government (G)
* Investment spending
*Net exports
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In Investment Spending will include the following
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1.) Costruction both residential and commericial
2.)Captial goods
3.)changes in inventories
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Consumer Sovereignty :
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Is consumers through their spending will determent what is produced in a market economy.
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Which of the 4 components changes the most through Expenditure Approach
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Investment spending
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Net Exports (x)
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Net exports = exports> imports
- x trade deficit imports> exports
+ trade surplus exports > imports
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What are the 7 components calculating GDP using the Income Approach
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1.) wages + salaries
2.) interest
3.) rent
4.) profit
5.) Indirent buisness taxes (IBT)
-taxes collected by producers for the government.
6.) Capital consumption allowances (CCA)
-depreciation
7.) Net Facto Income From Abroad (NFIFA)
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Gross domestic product using the Expenditure Approach
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Consumption+ Investment+ Government + Net exports
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Gross Domestic Product using the Income Approach
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Wages+interest+rent+ profit+ IBT+ CCA- NFIFA
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Explain why investment spending on capital goods fluctuates over time.
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Caused by interest rate
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State the three components of the private sector
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1.) Consumption 2.) Investment Spending 3.) Exports
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State the only component of the public sector
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Government
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GDP calculated as expenditures and as....
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Income must be the same or equal in a given year.
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In a market economy how is income distributed?
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By the ones who own the resources receive the income.
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