Measuring Domestic Output and National Income

Card Set Information

Author:
victor.cisneros
ID:
236303
Filename:
Measuring Domestic Output and National Income
Updated:
2013-09-22 13:23:44
Tags:
Economics GDP
Folders:

Description:
Gross Domestic Product
Show Answers:

Home > Flashcards > Print Preview

The flashcards below were created by user victor.cisneros on FreezingBlue Flashcards. What would you like to do?


  1. What is the definition of GDP?
    The total market value of all goods and services. GDP is a measure of Aggregate Output.
  2. What are the 3 types of transactions that would not be included in GDP?
    Pubic Transfer Payments- Welfare, Social Security

    Private Transfer Payments- Parent to Child

    Stock and Bond Market Transactions- Include the payment to the Broker.
  3. What are the Components of GDP using the expenditures approach?
    • 1) Consumption by Households
    • 2) Investment by Businesses
    • 3) Government Purchases
    • 4) Expenditures by Foreigners
  4. 1) Consumption by Households
    Personal Consumption Expenditures (C)
    Aggregate Spending on:
    • Durable consumer goods
    • Non-durable consumer goods
    • Consumer Expenditures for Services
  5. 2) Investment by Businesses
    Gross Domestic Investment (Ig)
    Aggregate Spending by Business inside the Country on:
    • Machinery, Equipment, Tools
    • All Construction
    • Changes in Inventories
    • Creation of new Capital Assets
  6. 3) Government Purchases (G)
    • Expenditures for Goods & Services
    • Expenditures for Social Capital-Schools, Highways
    • Does not include government transfer payments
  7. 4) Expenditures by Foreigners 
    Net Exports (Xn)
    • Imports
    • exports
  8. Gross Domestic Product=
    C + Ig + G + Xn
  9. What is Nominal GDP?
    Nominal GDP is a dollar measure of current prices.
  10. What is Real GDP?
    Reflection in changes in prices. GDP is a dollar measure of production,
  11. What are the Shortcomings of GDP?
    • Non market Activities-
    • Services of homemakers not counted

    • Leisure-
    • Value of leisure underestimated

    • Improved Product Quality-
    • Not counted

    • GDP and the Environment-
    • Social and environmental costs not counted

    Composition and Distribution of Output- Does not measure well being

    • The Underground Economy-
    • Not counted

What would you like to do?

Home > Flashcards > Print Preview