MACRO - Chapter 2
Card Set Information
MACRO - Chapter 2
Macroeconomics GDP Economic Growth Business Cycles
Value at current prices of all final products/services proceed annually in a country
The worth, in Canadian dollars, of all the products/services
How does Nominal GDP vary?
Differences in Nominal GDP between years are due to either price changes or quantity changes
Amount per unit of time
What does GDP include?
Products/Services produced within a country's borders no matter what the nationality of the business doing the producing.
Value of constant prices of all final products/services produced annually in a country (Uses constant prices for a single year)
Real GDP per person
Real GDP/population which is the best measure of countries material standard of living
Real GDP when all inputs-labour, capital, land/resources, and entrepreneurial ability are fully employed.
Potential GDP per person
expansion of economy's capacity to produce products/services: increase in potential GDP per person
What causes Economic growth?
By increase in the quantity or quality of a country's inputs - its labour, capital, land and entrepreneurship
Increased earning potential from work experience on-the-job training and education
Improvements in the quality of capital
is the factories and equipment that the businesses use to create their products and services
fixed amount at a moment in time
Economic growth rate
Annual percentage change in real GDP per person
measured as quantity of real GDP produced by an hour of labour
Competitive business innovations generate profits for winners, improving living standards for all, but destroy less proactive or less desirable products and proaction methods
up and down fluctuations of real GDP around potential GDP
period during which real GDP increases
period during which real GDP decreases
two or more successive guarders of contraction of real GDP
Real GDP below potential GDP
Real GDP above potential GDP
Real GDP minus potential GDP
Value output minus value intermediate prdoucts/services bought from other businesses
C + I + G + X - IM = Y
Aggregate spending= Aggregate income
Aggregate income minus net taxes
taxes minus transfer payments
Does non-canadian made product count towards GDP?
Whats missing from Real GDP?
Non-market Production, Underground Economy, Environmental Damage, Leisure and Poliical freedom, and social justice