ECON 101 Study Guide

ECON 101 Study Guide - ECON 101 New Material Study Guide Ch...

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ECON 101 New Material Study Guide
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Ch. 19 GDP GDP – market value of all final goods and services produced in a country during a period of time, typically one year. Measured using market values, not quantities Includes only market value of final goods, avoids double counting Does not include used goods, i.e. stuff sold on eBay Firms SELL goods, use factors of production to PRODUCE goods, pay wages to households in exchange for services. Transfer payments : gov’t payments to individuals for which the gov’t does not receive a service or good in return. EX. Social Security, not included in GDP Components of GDP Consumption- expenditures made by households Investment- business fixed investment, residential, and changes in business inventories Government Purchases- spending by federal, state, and local gov’ts on good and services. Net exports – exports – imports GDP EQUATION = Y = C + I + G + NX, C is the largest component Value-Added Method : additional market value a firm gives to a product , difference b/t what
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Short comings as a measure of well-being Value of leisure is not included, i.e. retiring or working less Not adjusted for pollution or other negative effects Not adjusted for changes in crime, inc. in crime reduces well-being, but may inc. GDP GDP is for the whole country, doesn’t include distribution of wealth Real GDP, separates price changes from quantity changes by designating a base year, holds prices constant – better measure of changes in the production of goods and services from one year to the next Nominal GDP, uses current year prices The GDP Deflator – a measure of the price level = Nominal GDP/Real GDP X 100. GDP Deflator is always 100 in the base year GNP (gross national product) – value of final goods and services produces by resident of the US, even if production is outside the US NNP – GNP minus the depreciation (consumption of fixed capital )of worn out capital National Income – to calculate total income received by US residents, subtract sales tax (indirect business tax) from NNP. National Income ≠ GDP Personal Income – subtract earning that firms retain and add transfer payments
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Ch. 20 Unemployment Employed, 16 years of age or older and working Unemployed, actively seeking unemployment Labor force = sum of employed and unemployed workers in the economy Unemployment rate, percentage of labor force that is unemployed People who do not have a job and are not actively seeking one = not in the labor force Discouraged workers – available for work but have not looked for a job because they believe there are none out there for them. Labor force participation rate – labor force / working age population X 100
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This note was uploaded on 01/17/2012 for the course ECON 101 taught by Professor Balaban during the Fall '07 term at UNC.

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ECON 101 Study Guide - ECON 101 New Material Study Guide Ch...

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