Economic Principles and Calculations

These flashcards cover key economic terms and concepts addressed in the lecture, focusing on inventory management and GDP calculations.

Undesired Inventory Buildup

The excess of unsold goods that a business has, which affects GDP calculations.

GDP

Gross Domestic Product, a measure of all goods and services produced in a country over a period.

Investment (I)

Spending on capital goods, which includes change in inventories when calculating GDP.

Desired Expenditure

The ideal amount of spending that businesses anticipate, excluding undesired inventory.

Equilibrium

A state in economics where supply equals demand, leading to stable prices.

AE (Aggregate Expenditure)

The total spending in the economy at a given level of income.

Imports

Goods and services purchased from other countries, which impact GDP negatively when increased.

Net Exports

The value of a country's total exports minus its total imports.

Change in Inventories

The difference in the value of inventory from one period to another, included in GDP.

45 Degree Line

A graphical representation in economics where aggregate expenditure equals total output, used to find equilibrium.