Macro Hammock Exam 2
Stocks and flows - ANS-
Circular Flow Diagram - ANS-a visual model of the economy that shows how dollars flow
through markets among households and firms
Income Approach vs. Expenditure Approach - ANS-Income Approach:
Find GDP by adding all incomes
*Will get about the same number because one person's income comes from another's
expenditure
Expenditure Approach:
-Y = C+I+G+X
-GDP = Consumption Spending (clothes) + Investment Spending (business & new house) +
Government Spending (schools, roads, etc) + Net Exports
-X = EX - IM. Where EX is exports and IM is imports
Per Capita GDP - ANS-GDP divided by the total population
Problems with GDP - ANS--Nonmarket Production
-Black and Grey Market Production
-Leisure and Job Quality
-Product Quality and New Goods
-Economic "bads"
-Income inequality and poverty
Price Level - ANS-Price Level: The overall level of prices of a good or service (stock)
Inflation - ANS-Inflation: An increase in the general price level (a flow)
- Can be calculated through GDP Deflator or CPI
Calculation of inflation rate - ANS-CPI new-CPI old/ CPI old * 100
Deflation - ANS-Deflation: A decrease in the price level (a flow)
Disinflation - ANS-Disinflation: A decrease in the inflation rate (a flow of a flow)
Nominal GDP - ANS-the value of final goods and services evaluated at current-year prices
Real GDP - ANS-nominal GDP that holds prices constant and focuses on changes in quantities
the production of goods and services valued at constant prices
Stocks and flows - ANS-
Circular Flow Diagram - ANS-a visual model of the economy that shows how dollars flow
through markets among households and firms
Income Approach vs. Expenditure Approach - ANS-Income Approach:
Find GDP by adding all incomes
*Will get about the same number because one person's income comes from another's
expenditure
Expenditure Approach:
-Y = C+I+G+X
-GDP = Consumption Spending (clothes) + Investment Spending (business & new house) +
Government Spending (schools, roads, etc) + Net Exports
-X = EX - IM. Where EX is exports and IM is imports
Per Capita GDP - ANS-GDP divided by the total population
Problems with GDP - ANS--Nonmarket Production
-Black and Grey Market Production
-Leisure and Job Quality
-Product Quality and New Goods
-Economic "bads"
-Income inequality and poverty
Price Level - ANS-Price Level: The overall level of prices of a good or service (stock)
Inflation - ANS-Inflation: An increase in the general price level (a flow)
- Can be calculated through GDP Deflator or CPI
Calculation of inflation rate - ANS-CPI new-CPI old/ CPI old * 100
Deflation - ANS-Deflation: A decrease in the price level (a flow)
Disinflation - ANS-Disinflation: A decrease in the inflation rate (a flow of a flow)
Nominal GDP - ANS-the value of final goods and services evaluated at current-year prices
Real GDP - ANS-nominal GDP that holds prices constant and focuses on changes in quantities
the production of goods and services valued at constant prices
