Macro Midterm

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Macro Midterm
2014-03-12 12:36:10

Guilford college
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  1. GDP
  2. Personal consumption
     measures the value of goods and services purchased by households during a time period. represents a demand for goods and services placed on firms by households
  3. Gross private domestic investment
    value of all goods produced during a period for use in the production of other goods and services like a hammer, similar to personal consumption
  4. value added
    the amount by which the value of a firm’s output exceeds the value of the goods and services the firm purchases from other firms
  5. GNP: An Alternative Measure of Output
    Gross national product (GNP) is the total value of final goods and services produced during a particular period with factors of production owned by the residents of a particular country
  6. Total output
    can be measured two ways: as the sum of the values of final goods and services produced and as the sum of values added at each stage of production
  7. Gross domestic income (GDI)
    equals the total income generated in an economy by the production of final goods and services during a particular period
  8. GDP compared to GDI
    equals gross domestic income, GDI, which includes compensation, profits, rental income, indirect taxes, and depreciation
  9. disposable personal income
    the income households have available to spend on goods and services
  10. GDP Revisions
    first estimate of real GDP for a calendar quarter is called the advance estimate (issued one month after quarter)  One month later, it issues a revised estimate, and a month after that it issues its final estimate. Every summer, the Commerce Department issues revised figures for the previous two or three years
  11. The Service Sector vs. GDP
    Tough to measure services like banks hospitals
  12. Household Production
    GDP does not count the value of your efforts to clean your own house, to wash your own car, or to grow your own vegetables
  13. Underground and Illegal Production
    Some production goes unreported in order to evade taxes or the law. It is not likely to be counted in GDP
  14.  Aggregate demand
     relationship between the total quantity of goods and services demanded (from all the four sources of demand) and the price level, all other determinants of spending unchanged
  15. The aggregate demand curve
    represents the total of consumption, investment, government purchases, and net exports at each price level in any period. It slopes downward because of the wealth effect on consumption, the interest rate effect on investment, and the international trade effect on net exports
  16. multiplier
    Multiplier=Δ (real GDP demanded at each price level)/ initial Δ (component of aggregate demand)
  17. Consumption disposable inocme
  18. MPC
    •  marginal propensity to consume
    • MPC=ΔC/ ΔY
  19.  aggregate expenditures
    which equal the sum of planned levels of consumption, investment, government purchases, and net exports at a given price level, to the level of real GDP
  20. Equilibrium
    Aggregate expenditures=GDP
  21. Multiplied Effect
    The Multiplied Effect of an Increase in Autonomous Aggregate Expenditures, based on MPC.  small MPC means flatter and samller multiplier effects, steepr means larger MCP and more spending through rounds. multipier =Δequilibrium/Δa
  22. Who measures CPI and in what two ways
    • Department of Labor
    • Household survey, very small sample size
    • Establishment survey, larger sample (takes longer to get to final)
    • E if htey worke dat all or temporary absence
    • U no work for the week, available for work, made attempts, expected to be recalled
  23. Who measures GDP
    Commerce department
  24. CPI
    Uses market basket from 1982-84 (base year) then compares with a current market basket
  25. consumption function
    composed of exogenous element (a) adde to MPC time total income