GDP & Measurement
What counts as Investment in GDP
Spending on new capital good
What does the GDP Deflator measure
All domestically produced final goods and services
Meaning of Y/pop
GDP per person
Components of AD
C + I + G + NX
What is SRAS
What are the differences between real and nominal GDP
Nominal uses current prices, Real uses base year prices
CPI vs GDP Deflator
Role of (Y/L)
What shifts AD right
Lower interest rates, lower taxes/higher gov expenditures
What shifts SRAS right
Business cost fall
What goods are excluded from GDP
Intermediate Goods
What is inflation, what is deflation
Increase in prices, decrease in prices
What shifts the Per-worker production function
What shifts AD left
Higher interest rates, higher taxes
What shifts SRAS left
Oil prices or wages rise
How inventories affect GDP
Changes in inventories
How is CPI inflation calculated
Percent Change in CPI over 1 year
Meaning of A
Technology, human capital
When do you move along AD curve
Change in P or Y
What are cost defined as
Cost of what businesses pay, not households
What does P measure in AD-SRAS
GDP deflator, prices of finals goods and services
Why does CPI not equal the value of the dollar
CPI measures prices, value of the dollar refers to exchange rate
Why do institutions matter
Encourage investment and innovation
How can interest rates shift AD curve
Lower interest rates increase investment and consumption, shifting right.
How does Technology affect SRAS
Improved A shifts SRAS right