+
Related Flashcards
Related Topics
Cards In This Set
| Front | Back |
|
Define GDP.
|
The market value of all final G&S produced within a nation’s borders during a given period of time
|
|
What are GDP's components?
|
Comsumption, Invenstments, Government Spending, and Net Exports
|
|
What is the largest component of GDP?
|
Consumption
|
|
What is the most volatile component (empirically and according to Keynes)?
|
The interest rate
|
|
What is the difference between real and nominal GDP?
|
Real is adjusted for inflation
|
|
Does U.S. GDP grow at a steady rate, or does it fluctuate over time?
|
It fluctutates over time.
|
|
Why don’t intermediate goods get counted in GDP (e.g. the flour a bread-maker buys)?
|
By counting intermediate goods in GDP, it will double count those amounts.
|
|
What’s the difference between GNP and GDP?
|
GDP is the value of all final G & S produced in the US while GNP is the value of all final G & S produced by US firms or residents of the country reguarless of what country they are in.
|
|
What is the problem with comparing nominal GDP (1996) with nominal GDP (1990)?
|
Because GDP in 1996 will more that 1990, because in 1996, more was produced and the prices went up. YOu need to adjust for inflation with the GDP deflator to get real GDP and GDP in 1996 and 1990 can be compared.
|
|
Does a rising GDP necessarily mean society is better off? What else might you want to consider?
|
It does not, you want to take into consideration; prices, population, what is produced, and how is it produced.
|
|
How do we measure the price level (or changes in the level of prices)?
|
Price index
|
|
What is the difference between the CPI and the PPI?
|
CPI tracks changes in a fixed “market basket” of several thousand G&S. PPI measures the wholesale prices of approximately 3000 items.
|
|
What is the GDP deflator?
|
An index of the prices of G&S included in GDP
|
|
How is the unemployment rate measured?
|
The number of unemployeed workers divided by the number of people in the labor force
|
|
Does the unemployment rate under-estimate or over-estimate the extent of the problem? Why?
|
The labor force does not include discouraged workers and part-time workers who would prefer full-time work.
|
