Term
| Gross Domestic Product (GDP) |
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Definition
the market value of the final goods and services produced within a country in a given time period
-compensation of employees + net interest + rental income + depreciation + corporate profits + proprietors income + indirect taxes - subsidies |
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Term
| Final goods (or service) vs Intermediate good |
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Definition
Final good (or service): an item that is bought by its final user during a specified time period ex: Ford truck
Intermediate good (or service): an item that is produced by one firm, bought by another firm, and used as a component of a final good or service ex: Firestone tire |
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Term
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Definition
measures GDP as the sum of consumption expenditure(C), investment(I), government expenditure on goods and services(G), and net exports of goods and services(X-M)
C+I+G+(X-M)
-aggregate expenditure: measures the dollar value of purchases of final goods and services |
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Term
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Definition
measures GDP by summing the incomes that firms pay households for the services of the factors of production they hire:
-wages for labor, interest for capital, rent for land, and profit for entrepreneurship (blue flow) |
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Term
| Real GDP per person (per capita) |
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Definition
-real GDP divided by the population
-tells us the value of goods and services that the average person can enjoy |
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Term
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Definition
1) expenditure on goods and services (expenditure approach)
2) income earned producing goods and services (income approach) |
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Term
| The growth rate of real GDP contributes to an improved standard of living because? |
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Definition
-more resources are available to devote to health care services
-the average person can enjoy an increasing value of consumption goods and services
-more resources are available to devote to improving the environment |
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Term
Income and production activities not counted in real GDP
-relevance? |
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Definition
might make real GDP an unreliable indicator of the standard of living
-household production
-underground economic activity
-health and life expectancy
-leisure time
-environmental quality
-political freedom and social justice |
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Term
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Definition
| Personal consumption expenditures |
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