GDP Basics
Another word for Gross Domestic Product
What is GDP?
One of the three ways to calculate GDP (Sell Price of Final Good)
What is the Expenditure Approach?
The four types of income added together when using the Income Approach.
What are wages, rent, interest, and profits?
The approach used to measure a country’s Nominal or Real GDP (depending on what prices you use)
What is the Value-Added Approach?
The two groups that exchange money and resources with each other in the basic circular flow model.
What are households and firms?
The total market value of all final goods and services produced within a country's borders during a specific period
What is the definition of GDP?
Money that households or people spend on goods and services
What is Consumerism?
The type of income earned by owning property or other resources.
What is rent?
Mainly used in processes that require _____
What are multiple steps?
The resources, including labor, that households provide to firms so firms can produce goods and services.
What are factors of production?
A new car that is produced and sold in the U.S. is an example of?
What is something that is accounted for in our GDP?
Building roads, paying government workers, and buying school or military equipment are all examples of
What is Government Spending?
This equation estimates GDP by adding together the four main types of income.
What is GDP ≈ Wages + Rent + Interest + Profits?
We use Value-Added Approach for this main reason
What is preventing double counting?
The payments households receive from firms in exchange for providing factors of production.
What is income?
Illegal activities in our country are an example of?
What is something that is not accounted for in our GDP?
Shows whether a country sells more to other countries than it buys from them
What are Net Exports?
The GDP when workers earn $600, landlords earn $100, lenders earn $50, and businesses earn $250 in profit.
What is $1,000?
Value added=
What is Value of Output- Cost of Intermediate Goods?
The market where households spend money to purchase the goods and services produced by firms.
What is the product market?
The difference between Nominal and Real GDP
What is the accounting of Inflation?
The formula for the Expenditure Approach
What is GDP=C+I+G+(X-M)?
The reason the Income Approach can measure the total value of goods and services produced, even though it measures money earned.
What is because money spent on production becomes income for workers and businesses?
Sell Price of Final Good=
What is the summation of each stage of value that was added?
This relationship shown by circular flow explains why measuring all spending and measuring all income should result in the same GDP.
What is one person’s spending becomes another person’s income?