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macroeconomics
the economy as a whole, using measurements of output, income, prices & employment
Gross Domestic Product (GDP)
dollar value of all goods, services, & structures produced within a country’s borders in one year
how gdp calculated
Multiply all goods & services produced in 12 month period by their prices then add them up
Number of goods & services estimated every three months (quarterly) and then revised
Excluded from GDP
intermediate products
second hand sales
nonmarket transactions
underground economy
intermediate products
goods used to make other products already counted in GDP
Flour, sugar, replacement tires
second hand sales
selling used items
Used car sales
nonmarket transactions
economic activities that don’t generate expenditures in market
Mowing your lawn, doing your own home repairs
undeground economy
gambling, smuggling, drugs, garage sales, bake sales, flea markets, farmers’ markets, etc. (cash payments which are hard to trace)
Gross National Product (GNP)
Total dollar value of all goods, services, & structures produced in one year by a country’s residents regardless of where production takes place; largest measure of nation’s income
how calculate gnp
Add all payments received by country, then subtract payments made to foreign-based businesses located in that country
population
source of labor & the primary consumer of goods; utility of population statistics
purposes of census
to update population growth, population shifts, predict changes in infrastructure (highways, mass transit, communication systems, utilities, etc.)
factors affecting population growth
fertility rate
life expectancy
net immigration
fertility rate
number of births that 1000 women are expected to undergo in their lifetime
life expectancy
average lifespan of a person
net immigration
overall population change caused by people moving in/out of the country
poverty threshold
benchmark that measures how much income people receive (aka poverty line)
Helps the government determine who qualifies for federal aid (food stamps, Head Start program, etc.)
reasons for income inequality
Education
Wealth
Changes in tax laws
Decline of unions; less manufacturing in U.S. than 40 years ago
More lower paying service jobs: movie theaters, restaurants, etc.
Discrimination
Changing family structure:
wealth distribution
top 1/5 own 75% of all wealth in U.S.
Bottom 2/5 own less than 2% of all wealth
welfare
economic/social assistance from government
Income assistance
Food stamps
Medicaid
Child abuse protection, foster care, job training, day care, etc.
income assistance
(unemployment, disability)
food stamps
government coupons that can be redeemed for food
medicaid
medical insurance for low-income people
tax credits
applied to federal/state taxes for working families
enterprise zone
companies given special tax/financial breaks to encourage them to set up shop in impoverished areas and hire local workers
workfare
people who receive welfare work for their benefits