CHapter 20 - Chapter 21 Midterm

What is Gross Domestic Product?

Total value of all goods and services produced within a country

What is Gross National Product?

Total value of all goods and services produced by country residents (citizens and businesses) regardless of location

Examples Between GNP & GDP

GDP (for PI) is Mcdonald food made and sold in philippines while GNP (for US) is Mcdonald profit in the Philippines

What is inflation? and example

Price goes up Ex. Egg price on Guam

What is Deflation?

Price goes down

Why does government not like deflation?

It creates volatility in the markets

What is Hyper Inflation? and example

Excess interest rate Ex. Venezuela $200 loaf of bread

What is Consumer Price Index?

Tracks the average price change of regular goods and services

Why are Consumer Price Index important?

Helps tracks inflation or deflation

What is Labor Force?

People who are either employed or seek work

What is Natural Level of Unemployment

Normal rate of unemployment in a economy

What is frictional unemployment?

People are temporarily between jobs or seek jobs

What is Structural Unemployment?

Mismatch between skills of workers and job market needs

What is cyclical unemployment

loss of jobs due to Economics downturns or recessions

What is Personal Consumption? Example?

Total value of goods and services purchased for personal use Ex. Buying groceries

What is Government Purchases? Example?

Total spending on goods and services by government Ex. Military

What is Exports and Imports

Exports selling to other countries, Imports buying from other countries 

Guam Exports and Imports Example

Exports are Memories and Land, Imports are food and clothing from US

What is Trade Deficit? Example?

Country imports more than exports Ex. Guam Economy

What is Trade Surplus? Example?

Country exports more than imports Ex.China Economy

What is Value Added?

Increase in worth that a company made by turning raw material into final goods

Value Added Example?

farm sells tomato then pizza hut turn it into pizza with other ingredients

What is Disposable Income?

Leftover money after necessary expenses paid

What is per capita GDP, GNP

GNP is average economic output per person, GNP is average income per person