National product = National income

Nominal national income - Total national income measured in current
dollars. Current dollar
Real national income - Measured in base period dollars, changes only
when quantities change. Constant dollar
Recession - GDP drops

Business cycle - Fluctuations of real national income around trend
value that follow wave-like pattern

Potential output Y* - The real GDP that an economy would produce
if its productive resources were fully employed. Potential gap.

Output gap - Actual output minus potential output Y-Y*
Recessionary gap - A situation in which actual output is less than
potential, Y<Y*
Inflationary gap - Y>Y*

Frictionary unemployment - Quitting/getting fired
Full employment, Y = Y*, only unemployment is frictional

Labour productivity - Level of real GDP / level of employment (or
hours worked)

Price level - Average level of all prices in an economy
Inflation - Rise in price level
Consumer Price Index (CPI) - Index of average prices of goods and
services commonly bought by households

Purchasing power of money - Amount of goods you can purchase with a
certain amount of money.

Nominal Interest rate - Price paid per dollar borrowed per period of
time.
Interest rate - Above but as % or fraction.
Real interest rate - Nominal adjusted for change in purchasing power.
Interest rate - Rate of inflation.

Exchange rate, CAD needed to buy a foreign currency unit.
Foreign exchange - Currencies traded on exchange market

Chp 20

Intermediate goods - Used as inputs for other companies
Final goods - Not used as inputs
Value added - Sales revenue-cost of intermediate goods,
each's firm's contributions to total output.

Expenditure side GDP - Adding up all compomenents of
expenditure
Income side GDP - Adding all income claims
GDP - Total value of G&S added by an economy

Expend side
Consumer expenditure - C, all g&s sold to final user.
Investment expenditure - I, expend on goods not for present
consumption. Net investment = Gross investment-depreciation
Government purchases - G, government expenditure on goods
currently prouced, excluding transfer payments.
Net exports - NX, Xa-IMa.

Income side
Factor Incomes - 3 main types, wages, interest, business
profits. Not domestic income is sum of the 3.
Non-Factor Payments - Indirect tax and subsidies,
depreciation.

Nominal GDP - Current prices
Real GDP - Base prices

If nominal GDP increased 6, and real increased 4 price
increased 2%

GDP Deflator - Nominal GDP/Real GDP

Change in GDP - New-Old/Old x100%


Chp 21

Desied aggregate expenditure (AE) - Sum planned to spend on domestic
output. AE = C + I +  G + NX

Autonomous expenditure - Do not change based on national income
Induced expendtiure - Do change

Consumption function - Connection between desired consumption and
its variable

Average propensity to consume APC = C/Yd
MPC = ^C/^Yd

Average propensity to save APS = S/Yd
MPS = ^S/^Yd

Marginal propensity to spend = ^AE/^Y

Equallibrium when desired aggregate expenditure = national income
A=Y

Simple multiplier - Ratio of change in equal nat inc to change in
autono that brought it.
^Y/^A = 1/1-z

Net tax revenue - Total tax rev - transfer payments.
Net tax rate - Increase in above when national income raises $1

Marginal prop spend + save = 1.