Chapter 2 and 3 Econ Terms

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Economics

University/Undergrad

Last updated 11:42 PM on 2/6/23
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33 Terms

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Gross Domestic Product
What does GDP stand for?
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Y= C + I + G + NX
what is the equation for GDP? Y =
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Consumption
value of all goods and services bought by households
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Investment
spending on capital and on goods bought for future use

\
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durable goods
goods that last a long time
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non-durable goods
goods that don’t last a long time
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services
work done for consumers
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Business fixed investment
the type of investment where spending is on plant and equipment that firms will use to produce other goods and services
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Residential fixed investment
the type of investment where spending is on housing units by consumers and landlords
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Capital
one of the factors of production that is A stock
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Investment
spending on new capital (A flow)
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Government spending
part of GDP that includes all government spending on goods and services
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transfer payments
what is not included in government spending?
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Net Exports
NX = exports minus imports
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Gross National Product
What does GNP stand for?
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GNP
total income earned by the nation’s factors of production regardless of location
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Gross Domestic Product
What does GDP stand for?
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GDP
total income earned by domestically-located factors of production (regardless of nationality)
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Nominal GDP
type of GDP that measures values using current prices
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Real GDP
type of GDP that measures values using prices of Base year
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Nominal GDP
what type of GDP is affected by BOTH changes in price and quantities of output?
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Real GDP
what type of GDP is affected by only changes in quantities?
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Inflation Rate
Percent increase in the overall level of prices
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GDP deflator equation
100 X Nominal GDP/Real GDP
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Consumer Price Index
The measure of the overall level of prices
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CPI
What is used to track changes in typical households cost of living and adjusts contracts for inflation?
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No
Is price of capital goods included in CPI?
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Yes
Is price of capital goods included in GDP deflator?
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No
Is price of imported consumer goods included in GDP Deflator?
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Yes
Is price of imported consumer goods included in CPI?
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fixed
Is basket of goods for CPI fixed or not?
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Yes
Does the GDP deflator for basket of goods change every year?
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Labor force
the term that is employed plus unemployed