Flashcards: Fundamentals of Macroeconomic Measurement — 13 cards

Goals of Macroeconomic Analysis

Focus on economic growth, low inflation, low unemployment, trade balance

Key macroeconomic data

GDP measures total output; business cycles show fluctuations

GDP measurement methods

Income approach sums incomes; expenditure approach sums spending

GDP approaches

C + I + G + (X - M) formula

GDP in different terms

Nominal vs. real GDP; GDP deflator; GDP per capita

Inflation measurement tool

Consumer Price Index (CPI) tracks price changes of a fixed basket

CPI vs GDP deflator

CPI includes imports; GDP deflator excludes imports; different baskets and weights

Final goods — definition?

Goods sold for consumption or investment, not used as inputs

Recessions — indicator?

Significant decline in GDP over consecutive quarters

Nominal vs real GDP

Nominal includes current prices; real adjusts for inflation

GDP deflator — purpose?

Measures overall price level changes in the economy

Purchasing Power Parity (PPP)

Adjusts GDP for cost of living differences across countries

Business cycles — reflected in?

GDP fluctuations indicating expansions and recessions