GDP Basics
What does GDP stand for?
Gross Domestic Product.
Name on type of illegal transaction not counted in GDP.
Illegal goods and services.
What does "C" stand for in the expenditure approach?
Consumer Goods/Services
Total dollar value of a nation's goods/services minus depreciation.
What is aggregate demand?
The total amount of goods/services in the economy that will be purchased.
How is GDP measured?
Through national income accounting, collecting statistics on production, income, and savings.
Babysitting for cash without documentation,
What does the "I" represent?
Business Investments
What is National Income (NI)?
Explain the price effect.
Lower prices lead to increased purchasing as real value of dollars increases.
What is the formula to calculate GDP?
GDP = Price of each good x Quantity produced.
To avoid double counting
What are net exports?
Exports minus imports of goods and services.
What is Personal Income (PI)?
Income received before taxes and transfer payments.
what is the wealth effect?
Falling prices increase wealth and demand.
What are final goods?
Products in the form sold to consumers, not intermediate components.
What is household work?
Goods and services traded outside official market settings.
Gove an example of durable goods.
Refrigerators, cars, or driveways. ECT.
Income left after taxes and transfer payments.
How do firms respond to higher prices?
They adjust output by increasing production for greater profits.
What is the difference between GDP and GNP?
GDP focuses on the geographic location of production, while GNP focuses on the citizenship of producers.
Name a government transfer not included in GDP.
Social Security payment.
What are nondurable goods?
Goods that last a short period of time, like food or light bulbs.
What does the income approach measure?
The total income earned by resources used in production.
What is total supply/demand?
The big picture view of the whole economy's supply and demand.