CHAPTER 11 (2014)Apunte Inglés
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ECONOMICS. CHAPTER 11
GDP & THE CPI: TRACKING THE MACROECONOMY.
MEASURING THE MACROECONOMY.
*Almost all countries calculate a set of numbers known as the NATIONAL INCOME and PRODUCT ACCOUNTS — They keep track of the flows of money between the different parts of the economy.
EXPANDED VERSION OF THE CIRCULAR-FLOW DIAGRAM: - Consumer spending is household spending on Goods & Services - A stock is a share in the ownership of a company hod by a shareholder - A bond is borrowing in the form of IOU(=I Own You) that pays interest - Disposable income = Income + Government transfers - Taxes — Is the total amount of household income available to spend on consumption and to save.
- Private savings = Disposable income - Consumer spending — Is the disposable income that is not spent on consumption.
- Government borrowing = Total amount of funds borrowed by all levels of Government into the financial markets.
- Government purchases of goods and services = Total expenditure on g&s by the federals, state and local governments.
ECONOMICS. CHAPTER 11 - Exports: Goods and services sold to other countries.
- Imports: Goods and services purchased to other countries.
- Inventories: Stocks of goods and raw materials hold to facilitate business operations.
- Investment spending: Spending on productive physical capital and on changes to inventories.
GROSS DOMESTIC PRODUCT (GDP).
*It is the value of all final goods and services produced in the economy during a given year.
GDP = C + I + G + X - IM GDP = CONSUMER SPENDING + INVESTMENT SPENDING + GOVERNMENT PURCHASES OF GOODS AND SERVICES + EXPORTS - IMPORTS THE GDP… -Measures the size of the economy.
-Used to compare economic performance year per year.
-Used to compare economic performance country to country.
AGGREGATE OUTPUT: Economy’s total quantity of output.
REAL GDP: Total value of the final goods and services produced in the economy during a given year, calculated using the prices of a selected base year.
NOMINAL GDP: Measure of average GDP per person, it is not by itself an appropriate policy goal.
ECONOMICS. CHAPTER 11 CHAINED DOLLARS: Method of calculating changes in real GDP using the average between the growth rate calculated using an early base year and the growth rate calculated using a late base year.
GDP PER CAPITA: Measure of average GDP per person, but is not by itself an appropriate policy goal.
PRICE INDEXES AND THE AGGREGATE PRICE LEVEL.
Aggregate price level: Measure of the overall level of prices in the economy.
Price index: Ratio of the current cost of the market basket to the cost in base year x 100 INFLATION RATE: Yearly percentage change in a price index, typically based upon a consumer price index, the most common measure of the aggregate price level.
CONSUMER PRICE INDEX (CPI): Measures the cost of the market basket of a typical urban American family.