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GDP
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Gross Domestic Product- the total market value of all final goods and services produced annually in an economy
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Stocks and flows
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A stock variable is measured at one specific time, and represents a quantity existing at that point in time, which may have accumulated in the past. A flow variable is measured over an interval of time. Therefore a flow would be measured per unit of time
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Value Added
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-Value added is an important concept
-A firm's value added is the value of its output minus the value of the intermediate goods the firm used to produce that output.
-A firm's value added is the value of its output minus the value of the intermediate goods the firm used to produce that output.
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Nominal GDP
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the production of goods and services valued at current prices
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Real GDP
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the production of goods and services valued at constant prices
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GDP deflator
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a measure of the price level calculated as the ratio of nominal GDP to real GDP times 100
GDP deflator = Nominal GDP/ Real GDP
GDP deflator = Nominal GDP/ Real GDP
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Net export - NX
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-The value of total exports (X) minus the value of of total imports (IM)
NX= X - IM
NX= X - IM
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Inflation
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a general increase in prices and fall in the purchasing value of money.
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CPI (Consumer Price Index)
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an index of the cost of all goods and services to a typical consumer
Does the CPI overstate of inflation?
The CPI measures the price of a fixed basket of goods, it does not reflect the ability of consumers to substitute toward goods whose relative prices have fallen. Thus, when relative prices change, the true cost of living rises less rapidly than does the CPI.
Does the CPI overstate of inflation?
The CPI measures the price of a fixed basket of goods, it does not reflect the ability of consumers to substitute toward goods whose relative prices have fallen. Thus, when relative prices change, the true cost of living rises less rapidly than does the CPI.
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Unemployment rate
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The unemployment rate is the statistic that measures the percentage of those people wanting to work who do not have jobs.
Three different categories: Employed, Unemployed, Not in the labor force
Three different categories: Employed, Unemployed, Not in the labor force
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National income accounts identity
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Y= C + I + G + NX
GDP, Y
Consumption, C
Investments, I
Government spending, G
Net export, NX
GDP, Y
Consumption, C
Investments, I
Government spending, G
Net export, NX
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