Econ Midterm Review

Econ Midterm Review - Consumption Spending by households on...

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Consumption Spending by households on goods and services, with the exception of purchases of new housing. GDP deflator A measure of the price level calculated as the ratio of nominal GDP to real GDP times 100. It measures the current level of prices relative to the level of prices in the base year. (Nominal/Real)X100 Government Purchases Spending on goods and services by local, state, and federal governments Gross Domestic Product (GDP) The market value of all final goods and services produces within a country in a given period of time Investment Spending on capital equipment, inventories, and structures, including household purchases of new housing GNP Total income earned by a nation’s permanent residents. It differs from GDP by including income that our citizens earn abroad and excluding income that foreigners earn here NNP Total income of a nation’s residents(GNP) minus losses from depreciation. Depreciation is the wear and tear on the economy’s stock of equipment and structures, such as trucks rusting and computers becoming obsolete. Percentage change ((x2-x1)/(x1))x100 Inflation Rate The percentage change in some measure of the price level from one period to the next Ex. IR in yr 2 = ((GDP deflator in yr2 – GDP deflator in yr 1)/(GDP deflator in yr 1))X100 Macroeconomics The study of how households and firms make decisions and how they interact in markets
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Net exports Spending on domestically produced goods by foreigners (exports) Minus spending on foreign goods by domestic residents (imports) Nominal GDP The production of goods and services valued at current prices
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Econ Midterm Review - Consumption Spending by households on...

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