24290219
Description
Flashcards by Sophia Lynch, updated more than 1 year ago
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Created by Sophia Lynch
almost 4 years ago
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| Question | Answer |
| What two things does GDP measure? | 1. Total income of everyone in the economy 2. Total expenditure on the economy's output of goods and services In an economy, income MUST EQUAL expenditure. |
| What are the two ways that GDP can be computed? | 1. Adding up total income (wages, rent & profit) 2. Adding up total expenditure by households |
| What is GDP? | All final goods and services produced within a country in a given time period. |
| What does GNP stand for? | Gross National Product or Gross National Income |
| What is GNP? | The total income earned by a nation's permanent residents (called nationals) |
| How does GNP differ to GDP? | It measures money NZ nationals earn overseas and excludes money foreign nationals earn in NZ |
| What does NFIA stand for? | Net Factor Income from Abroad |
| What does NFIA measure? | The difference between the income paid to NZ's in foreign countries and that paid to foreigners for their contribution to GDP. |
| The difference between GDP and GNP can be large for what type of economies? | Small open economies. |
| What are the components of GDP? | (C) consumption (I) investment (G) government (NX) imports & exports |
| What is 'nominal GDP'? | Uses current prices to value the economy's production of goods and services in that year. Changes in nominal GDP reflect changes in the quantity of goods and services AND their prices. |
| What is 'real GDP'? | Uses constant (base-year) prices to value a production of goods and services. Changes in real GDP on reflect changes in the quantity of goods and services. |
| What is the nominal GDP deflator? | The deflator tells us the proportion of the rise in nominal GDP attributable to a rise in prices rather than a rise in quantities produced. |
| What is the formula for the GDP deflator? | A measure of the price level calculated as the ratio of nominal GDP to real GDP times 1,000. |
| Why is the base year deflator always 1,000? | Because nominal and real GDP must be equal in the base year. |
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