3.1-3.2 Measuring and variations of economic activity
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11 Terms
GDP Gross Domestic Product
The market value of all final goods and services within a country
GDP = C + I + G + (X-M)
GNI Gross National Income
Measure of economic activities of a nation
GNI = GDP + Net Factor Income from Abroad (income earned from abroad – income paid to foreigners)
Nominal GDP and Real GDP formula
Advantages/importance of national income statistics (GDP, GNI)
Comparisons across countries
Informs policy makers
Disadvantages of national income statistics (GDP, GNI)
Overestimate quality of life
Inaccuracies
Aggregate demand
The total demand for the output of a nation at a range of price levels in a particular period of time from all consumers
Factors of AD (Aggregate Demand)
Consumption
Investment
Government expenditure
Net exports
* GDP = C + I + G + (X-M)
Aggregate supply
The total quantity of output of goods and services produced by the firms in an economy at a range of price levels over a particular period of time
Factors for AS (Aggregate Supply)
Cost of production
Supply shocks
Monetarist model of economy adjusting to potential output level from recession
Monetarist model of economy adjusting to potential output level from boom
