8.1 & 8.2

These flashcards cover key concepts and terms from the study of macroeconomics.

Macroeconomics

The branch of economics that studies the economy as a whole, including total demand and supply for goods and services.

Aggregate demand

The total demand for all goods and services in an economy at a given overall price level and in a given time period.

Aggregate supply

The total supply of goods and services that firms in an economy plan to sell during a specific time period.

Circular flow of income model

A model that illustrates the movement of money through the economy, showing how households and firms interact in the product and resource markets.

Leakages

Money that exits the circular flow of income, such as savings, taxes, and imports.

Injections

Money that enters the circular flow of income, such as investment, government spending, and exports.

Gross Domestic Product (GDP)

The market value of all final goods and services produced in a country over a specific time period, usually a year.

Gross National Income (GNI)

The total income earned by a nation's residents and businesses, regardless of where that income was generated.

Nominal GDP

The total value of all goods and services produced in a country measured at current market prices.

Real GDP

GDP adjusted for inflation, reflecting the true value of goods and services produced.

Purchasing Power Parity (PPP)

An economic theory that compares different countries' currencies through a 'basket of goods' approach.

Per capita GDP

GDP divided by the population of a country, giving an average economic output per person.

Natural output

Also known as aggregate supply which means total open

Three ways to measure the value of national output

Expenditure,income and output approach

Expenditure approach

Adds up all spending to buy final goods and services produced within a country over a time period

Income approach

Adds up all income earned by the factors of production

Output approach

Calculates the value of all final goods and services produced in a country

GDP per capital

Total GDP of the country divided by its population

Real value

Is a measure of value that takes into account changes in prices over time