Econ - Macro

Economic growth definition

When a country produces more goods and services in one period than previously. Usually measured by changes in rGDP

GDP definition

total monetary value of all final goods and services produced within an economy within a given period of time

GNI Definition

Total income of a nation’s people and businesses.

Circular flow of Income definition

model illustrating the flow of goods, services, factors of production, and money between different sectors of an economy.

Injections definition

flows of money that come from the “outside” : investment, gov’t spending, and exports.

leakages definition

flows of money that leave the economy: savings, imports, taxes

GDP per capita definition

Average income per citizen

National income definition

measure of total economic activity that takes place within an economy

HDI Definition

summary measure of average achievement in key dimensions of human development

Real GDP Definition

GDP with inflation accounted for

Nominal GDP definition

GDP without consideration of inflation

PPP definition

Purchasing power parity: the size of an economy by its power to purchase goods and services within that country.

Recession definition

If there is a decrease in rGDP that lasts more than two quarters

Trough definition

A low point in the business cycle - often signifies the end of a recession

Peak definition

A high point in the business cycle, often right before a downturn or a recession begins

Inflation definition

GNP Definition

total monetary value of all final goods and services produced by factors owned by a country’s citizens within a given period of time

Advantages of GDP

Widely used, easy to compare across countries, informs policymakers, gives an indication of average income

Disadvantages of GDP

Overestimated quality of life, doesn’t account for income distribution/disparity, can be inaccurate, does not account for improvements in quality of output

Nominal GDP Calculation (expenditure method)

C + I + G + (X-M)

GNI Calculation

GNI = GDP + incomes flowing in from other countries – incomes flowing out to other countries 

Equation for a deflator for rGDP and rGNI from Nominal

rGDP/rGNI = (Nominal)/Price deflator x 100