Macroeconomics Unit 1 Vocabulary

Flashcards on Macroeconomics Unit 1 covering Economic Growth and Gross Domestic Product (GDP).

Macroeconomics

The study of the economy as a whole, focusing on aggregates or totals and key economic indicators.

Aggregate Demand

The level of economic activity depends directly on this in the economy (AD).

Total expenditure (E)

The total amount which all sectors of the economy are willing to spend over some given period of time. (C+I+G+(X-M))

Total supply (Y)

The total production of goods and services over some given period of time. (Y = Output)

Economic Growth

Refers to the increasing ability of a nation to satisfy the material wants of its people over time, indicated by an increase in national output and improvement in the standard of living.

Gross Domestic Product (GDP)

The total market value of all final goods and services produced in the economy during a period of time, measured in money terms.

ABS (Australian Bureau of Statistics)

The statistical agency of the Government of Australia.

Final goods

GDP counts only new domestic production of these goods that are bought for final use and are not subject to further processing.

Expenditure approach to measuring GDP

Adds all the expenditures for final output during a period of time (GDP = C + I + G + (X-M)).

Income approach to measuring GDP

The sum of incomes of the resources ( GDP = Wages + rent + Interest + Profit).

Output approach to measuring GDP

Adds new domestic production of final goods

Non-productive transactions

GDP excludes the value of these types of transactions e.g. govt. transfer (welfare) payments, private gifts, second hand sales, financial transactions like shares.

Intermediate goods

GDP excludes the value of these goods that are used for further processing.

Nominal GDP

Also called money GDP or GDP at current prices; measures final output in terms of the actual prices existing during the time period of production.

Real GDP

GDP at constant prices, measuring the real value of goods and services by eliminating the effects of price changes.

CPI

Consumer Price Index; a measure of changes, over time, in prices of a constant basket of goods and services representative of consumption expenditure by households.

Real GDP Per Capita

Adjusts GDP for population changes, showing if there are more goods and services available for each member of the population over time.

Economic Welfare

A broader way of considering the standard of living.

U.N Human Development Index

A summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable and having a decent standard of living.

Sources of Growth Inputs

Quantity and quality of resources such as land, labour, capital and enterprise.

The Business Cycle

Fluctuations in the circular flow with periods of expansions and contractions.