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Chapter 8 - GDP
Macro Midterm #1
| Term | Definition |
|---|---|
| GDP | The market value of all final goods and services produced in a country during 1 year. |
| 4 components of GDP | Consumption (C), Investment (I), Government purchases (G), Net Exports (NX) |
| Y= | C+I+G+NX |
| Consumption | The value of all final goods and services purchased by households, excluding new houses. |
| 3 categories of consumption | 1. services 2. durable goods 3. Nondurable goods |
| Investment | The value of all final goods and services purchased by firms used to produce other goods and services |
| Government Purchases | The value of all final goods & services purchased by all levels of government |
| What doesn't G include? | The salaries and wages of government workers. |
| Net Exports | Exports minus imports |
| What is not included in GDP? | 1. Household Production 2. Underground Economy 3. Intermediate Goods 4. Used Goods |
| Nominal GDP = | P*Q |
| Real GDP = | P(base year)*Q |
| %Change= | (New Value - Old Value)/Old Value *100 |
| GDP Deflator = | (Nominal GDP/Real GDP) *100 |
| Inflation = | [(New GDP Deflator - Old GDP Deflator)/Old Deflator]*100 |
| Gross National Product (GNP) | The value of final goods and services produced by residents of the "home" country, even if some of the production occurs "abroad" and excludes production by foreign firms in the "home" country. |
Created by:
cindysmile79
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