Circular Flow of Income
What are the two main sectors in the basic circular flow of income model?
Households and firms
What does GDP stand for?
Gross Domestic Product
Does GDP account for non-market activities?
No, GDP does not include non-market activities such as household work or volunteer services
What is the Human Development Index (HDI)?
A composite index measuring average achievement in key dimensions of human development: health, education, and standard of living
What is the distance from the earth to the sun?
(In miles or Km)
92 - 93 million miles
137.55 - 147.55 million km
In the circular flow model, what do households provide to firms?
Factors of production, such as labor, land, capital, and entrepreneurship
What is the definition of GDP?
The total market value of all final goods and services produced within a country during a specific period
How does the underground economy affect GDP accuracy?
The underground economy involves unreported transactions, leading to an underestimation of actual economic activity
Which organization publishes the HDI?
The United Nations Development Programme (UNDP).
What is the GOAT team?
MANCHESTER UNITED
(Half points for Real Madrid, Double negative points for Barcelona, Man City or Liverpool)
What do firms provide to households in return for factors of production?
Goods and services.
Distinguish between nominal GDP and real GDP.
Nominal GDP is measured at current market prices, while real GDP is adjusted for inflation to reflect constant prices
Why might GDP not accurately reflect a country's standard of living?
GDP does not account for income distribution, environmental degradation, or non-economic factors like health and education
In the income approach, which types of income are summed to calculate GDP?
Wages, rent, interest, and profits
Who is the goat?
(DOUBLE JEOPARDY)
RONALDO
(IF MESSI WAS SAID, DOUBLE POINTS CUT)
Name two types of injections in the circular flow of income.
Investment and government spending
What is GDP per capita, and why is it used?
GDP per capita is GDP divided by the population; it is used to measure the average economic output per person
Does GDP consider the negative effects of economic activity, such as pollution?
No, GDP does not account for negative externalities like pollution
What is the purpose of the OECD Better Life Index?
To measure well-being across countries based on various factors, including housing, income, jobs, community, education, environment, and health
What is the formula for GDP using the expenditure approach?
GDP = C + I + G + (X - M), where C is consumption, I is investment, G is government spending, and (X - M) is net exports
Name two types of leakages in the circular flow of income.
Savings and taxes.
Explain the difference between GDP and Gross National Income (GNI).
GDP measures the value of production within a country's borders, while GNI includes the value of income from abroad
How does GDP treat the depletion of natural resources?
GDP does not subtract the depletion of natural resources, potentially overstating economic well-being
How does the Happy Planet Index (HPI) differ from GDP?
The HPI measures sustainable well-being by considering life expectancy, experienced well-being, and ecological footprint
Who won the UCL in 2010?
(Double Jeopardy)
Inter-milan