Macro Economics
HTW Berlin - Ülkü
HTW Berlin - Ülkü
Kartei Details
| Karten | 50 |
|---|---|
| Sprache | English |
| Kategorie | VWL |
| Stufe | Universität |
| Erstellt / Aktualisiert | 04.03.2016 / 28.03.2016 |
| Weblink |
https://card2brain.ch/box/macro_economics
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| Einbinden |
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Closed economie
does not interact with other economies in the world
Open economy
interacts freely with other economies around the world
Exports
domestically - produced goods & services sold abroad
Imports
foreign - produced goods & services sold domestically
Net exports (NX) (trade balance)
= value of exports - value imprts
Variables that influences net exports
Trade deficit
an exess of imports over exports
Trade surplus
an excess of exports over imports
Balanced trade
when exports equals imports
Net capital outflow (NCO)
domestic residents' purchases of foreign assets - foreigners' purchases of domestic assets
Foreign direct investment
Domestic residents actively manage the foreign investment. e.g. McDonalds opens a fast-food outlet in Moscow
Foreign portfolio investment
Domestic residents purchase foreign stocks or bonds, supplying "loanable funds"to a foreign firm
When NCO > 0
Capital outflow - Domestic purchases of foreign assets exceed foreign purchases of domestic assets
When NCO < 0
Capital inflow -- Foreign purchases of domestic assets exceed domestic purchases of foreign assets.
Variables that influence NCO
Microeconomics. (Definition)
The study of how households and firms make decisions. And how they interact in markets.
Macroeconomics. (Definition)
The study of economy-wide phenomena, including inflation, unemployment, and economic growth.
Gross Domestic Product (GDP) - What measures the GDP?
- measures total income of everyone in the economy.
- measures total expenditure on the economy’s output of goods and services.
GDP - Definition
Is the market value of all final goods & services produced within a country in a given period of time.
Whar are the components of GDP?
Recall : GDP is the total spending.
4 components.
- Consumption (C)
- Investment (I)
- Government Purchases (G)
- Net Exports (NX)
Consumption (C) - Definition
Consumption is total spending by households on goods and services..
Investment (I) - Definition
Investment is total spending on goods that will be used in the future to produce more goods.
includes spending on:
- capital equipment (e.g., machines, tools)
- structures (factories, office buildings, houses)
- inventories (goods produced but not yet sold)
Government Purchases (G) - Definition
Goverment Purchases is all spending on the g&s purchased by govt at the federal, state, and local levels.
- G excludes transfer payments, such as Social Security or unemployment insurance benefits. They are not purchases of goods and services..
Net Exports (NX) - Definition
NX = exports–imports
- Exports represent foreign spending on the economy’s goods and services.
- Imports are the portions of C, I, and G that are spent on goods and services produced abroad.
Adding up all the components of GDP
Y = C + I + G + NX
Nominal GDP
- values output using current prices
- notcorrected for inflation
Compute nominal GDP for each year: Price x Quantity (+ Price x Quantity) = GDP
Compute level of increase: (start value - end value) / start value x 100 = %
Real GDP
- values output using the prices of a base year
- is corrected for inflation
Compute real GDP in each year, using the Price from base year:
Price (base) x Quantity (+ Price (base) x Quanity) = GDP
GDP Deflator -Definition
The GDP deflator is a measure of the overall level of prices.
GDP Deflator = 100 x (nominal GDP / real GDP)
to measure the economy’s inflation rate is to compute the percentage increase in the GDP deflator from one year to the next.
GDP and Economic Well-Being
Real GDP per capita is the main indicator of the average person’s standard of living.
But GDP is not a perfect measure of well-being.
GDP does not value:
The quality of the environment
Leisure time
Non-market activity, such as the child care a parent provides his or her child at home
An equitable distribution of income
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