AP Macro Economics Chapter Five

GDP? final goods/services

included

GDP? new production

included

GDP? domestically produced goods/services

included

GDP? Market Transactions

included

GDP? Non-market transactions (e.g., paid for chores)

excluded

GDP? underground economy (e.g., black market)

excluded

GDP? Intermediate goods

excluded

GDP? Transfer payments (e.g., Social Security Benefits)

excluded

Does “Real GDP” adjust for inflation?

Yes

Does “Nominal GDP” adjust for inflation

No

Four phases of business cycle

expansion, peak, contraction, trough

business cycle expansion

rising

business cycle peak

highest point

business cycle contraction

falling

business cycle trough

lowest point

four parts of GDP

C, I, G, NX

Parts of GDP: C?

Consumption

Parts of GDP: I?

Investment

Parts of GDP: G?

Government Spending

Parts of GDP: NX?

Net Exports

Net exports formula

exports - imports

Nominal GDP formula

price x quantity

Real GDP formula

Nominal GDP / (GDP Deflator / 100)

Per Capita GDP Formula

GDP / Population

GDP Deflator Formula

(Nominal GDP / Real GDP) x 100