Macroeconomics and GDP Flashcards

Flashcards covering concepts from the Macroeconomics unit, including GDP, its components, and its limitations.

What is macroeconomics?

The study of the large economy as a whole

What are the three macroeconomic goals for all countries?

1. Promote Economic Growth 2. Limit Unemployment 3. Keep Prices Stable (Limit Inflation)

What is Gross Domestic Product (GDP)?

The dollar value of all final goods and services produced within a country in one year.

What are three things that are NOT included in GDP?

1. Intermediate Goods 2. Nonproduction Transactions 3. Nonmarket and Illegal Activities

What are the four components of GDP?

1. Consumer Spending 2. Business Investment 3. Government Spending 4. Net Exports

Give the equation for GDP.

GDP (Y) = C + I + G + (X-M)

What is a limitation of using GDP to measure standard of living?

GDP does not measure happiness and progress.

What is GDP per capita?

GDP divided by the population

What does GDP per capita identify?

On average how many products each person makes.

What is the best measure of a nation’s standard of living?

GDP per capita

What is Nominal GDP?

GDP measured in current prices and does not account for inflation from year to year.

What is Real GDP?

GDP expressed in constant, or unchanging, dollars and adjusts for inflation.

What is the Growth Rate?

The change in real GDP per capita over time.

Name 5 reasons why some countries have more growth.

1. Economic System 2. Rule of Law 3. Capital Stock 4. Human Capital 5. Natural Resources