Study Econ Test 1 Flash Cards

 
Pile Management Card
Econ Test 1

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Net Foreign Factor Income
Income earned by Americans in foreign lands - income earned by foreignors in U.S.
Personal Income (PI) =
All income of citizens, whether earned or unearned.
NI -- Social Security contributions -- Corporate income taxes -- undistributed corporate profits + transfer payments
Nominal Interest Rate =
Real interest rate + inflation premium (expected rate of inflation).
GDP Gap
Potential GDP - Actual GDP
Okun's Law
Every 1% above NRU = GDP Gap of 2%
Natural Rate of Unemployment (NRU) =
Frictional Unemployment + Structural Unemployment
Unemployment Rate =
unemployed/total labor force x 100.
Rule of 70
70/any rate (inflation, growth, etc) = number of years until prices, GDP etc. double
Rate of Inflation and Growth =
PI current year -- PI previous year/PI previous year x 100
or
Real GDP current year -- Real GDP previous year/Real GDP previous year.
Nominal GDP =
Price (P) x Quantity (Q)
Real GDP and Real Income =
Nominal GDP/Price Index x 100
or
Real Income/CPI x100
Price index (temporal comparision of prices of all goods/services in market relative to other yrs), Consumer Price Index ( uses prices of ~300 goods/services used by avg. consumer), Producer Price Index (uses prices of resources, can be used to anticipate inflation)
= current price/price in base year x 100
Base Year index is therefore always 100.
Per Capita GDP =
GDP/population
Disposable Income (DI) =
PI -- personal taxes
or
Consumption (C) + Savings (S)
National Income (NI)=
Income earned by American owned resources in the world.
NDP + Net foreign factor income -- indirect business taxes.
Net Domestic Product (NDP) =
GDP -- Consumption of fixed capital (depreciation)
(nominal) Gross Domestic Product (GDP) =
C+Ig+G+Xn
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