MACRO - Chapter 2

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  1. Nominal GDP
    Value at current prices of all final products/services proceed annually in a country
  2. Value
    The worth, in Canadian dollars, of all the products/services
  3. How does Nominal GDP vary?
    Differences in Nominal GDP between years are due to either price changes or quantity changes
  4. Flow
    Amount per unit of time
  5. What does GDP include?
    Products/Services produced within a country's borders no matter what the nationality of the business doing the producing.
  6. Real GDP
    Value of constant prices of all final products/services produced annually in a country (Uses constant prices for a single year)
  7. Real GDP per person
    Real GDP/population which is the best measure of countries material standard of living
  8. Potential GDP
    Real GDP when all inputs-labour, capital, land/resources, and entrepreneurial ability are fully employed.
  9. Potential GDP per person
    Potential GDP/population
  10. Economic growth
    expansion of economy's capacity to produce products/services: increase in potential GDP per person
  11. What causes Economic growth?
    By increase in the quantity or quality of a country's inputs - its labour, capital, land and entrepreneurship
  12. Human Capital
    Increased earning potential from work experience on-the-job training and education
  13. Technological Change
    Improvements in the quality of capital
  14. Capital
    is the factories and equipment that the businesses use to create their products and services
  15. Stock
    fixed amount at a moment in time
  16. Economic growth rate
    Annual percentage change in real GDP per person
  17. Productivity
    measured as quantity of real GDP produced by an hour of labour
  18. Creative destruction
    Competitive business innovations generate profits for winners, improving living standards for all, but destroy less proactive or less desirable products and proaction methods
  19. Business cycles
    up and down fluctuations of real GDP around potential GDP
  20. Expansion
    period during which real GDP increases
  21. Contraction
    period during which real GDP decreases
  22. Recession
    two or more successive guarders of contraction of real GDP
  23. Recessionary gap
    Real GDP below potential GDP
  24. Inflationary gap
    Real GDP above potential GDP
  25. Output gap
    Real GDP minus potential GDP
  26. Value Added
    Value output minus value intermediate prdoucts/services bought from other businesses
  27. C + I + G + X - IM = Y
    Aggregate spending= Aggregate income
  28. Disposable Income
    Aggregate income minus net taxes
  29. Net taxes
    taxes minus transfer payments
  30. Does non-canadian made product count towards GDP?
  31. Whats missing from Real GDP?
    Non-market Production, Underground Economy, Environmental Damage, Leisure and Poliical freedom, and social justice
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MACRO - Chapter 2
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