question

income and national production and expenditure

answer

income = expenditure

national production = national expenditure = national income

expenditure = C + G + I + NX (C > G > I > NX)

national production = national expenditure = national income

expenditure = C + G + I + NX (C > G > I > NX)

question

Net Exports (NX)

answer

NX = exports - imports (in Canada, NX is negative as imports are larger than exports)

question

income

answer

income = wages + interest + rental income + profit

question

real and nominal GDP

answer

rGDP = current output x base price

nGDP = current output x current price

nGDP = current output x current price

question

value added

answer

VA = price of output - price of input

question

GDP deflator

answer

Nominal GDP/Real GDP x 100

question

growth rate

answer

GR = X2 - X1 / X1 x 100%

question

inflation rate

answer

GDP def2 - GDP def1 / GDP def1 x 100%

CP2 - CPI1 / CPI1 x 100%

X2 - X1 / X1 x 100%

CP2 - CPI1 / CPI1 x 100%

X2 - X1 / X1 x 100%

question

GDP per capita

answer

GDP/population

question

market basket

answer

MB = sum of (price x output)

base output x current price

base output x current price

question

percent change

answer

X2 - X1 / X1 x 100%

question

CPI

answer

CPI = COB current / COB base x 100

COB - cost of basket

have to be base output to accurately compare price change

COB - cost of basket

have to be base output to accurately compare price change

question

core inflation

answer

excludes food and energy

X2 - X1 / X1 x 100%

X2 - X1 / X1 x 100%

question

all items/headline inflation

answer

core (other) CPI = p

CPI pf food + eng = t ---> 50/50 weight assigned to both therefore the average of the two is (p + t/2) then calculate inflation (base year = 100)

CPI pf food + eng = t ---> 50/50 weight assigned to both therefore the average of the two is (p + t/2) then calculate inflation (base year = 100)

question

deflating nominal to real value

answer

current value = past value x CPI current / CPI past

question

PPP adjusted GDP

answer

GDP nominal x (1/1+price lvl adjustment %)

60% = 100% + 60% = 1.60

-20% = 100% -20% = 0.80

these in denominator

60% = 100% + 60% = 1.60

-20% = 100% -20% = 0.80

these in denominator

question

labour force (LF)

answer

employed + unemployed

question

unemployment rate

answer

Unemployed / LF x 100%

question

employment rate

answer

employed / working pop x 100%

question

Labour force participation rate

answer

LF / working pop x 100%

question

equilibrium

answer

demand = supply

question

digression: rule of 70

answer

periods to double = 70 / growth rate per period

question

real GDP per capita growth rate

answer

nGDP growth rate - inflation rate - pop growth rate

question

Y/L = Af(K/L, N/L)

answer

Y - production/GDP

L - labour/ human capital

A -m technology

K - physical capital

N - natural resources

f - function of

L - labour/ human capital

A -m technology

K - physical capital

N - natural resources

f - function of

question

real interest rate

answer

nominal interest rate - inflation

r = i - pi

r = i - pi

question

PAE

answer

A +bY

A- autonomous expenditure

b - slope

A- autonomous expenditure

b - slope

question

aggregate expenditure (AE)

answer

AE>Y decrease inventory increase production until equil

AE<Y increase inventory decrease production until equil

PAE = Y planned and actual AE are equal

AE<Y increase inventory decrease production until equil

PAE = Y planned and actual AE are equal

question

multiplier effect

answer

change in Y = change in G x (1 / 1-MPC)

MPC is marginal propensity to consume; amount of consumption increases when after tax income increases by $1 --> larger = less money gov spends

MPC is marginal propensity to consume; amount of consumption increases when after tax income increases by $1 --> larger = less money gov spends