Chapter 8 measuring economic performance and growth

1 exports

1. GDP adjusted to better estimate economic welfare.

2. Gross Domestic Product

2. A way to account for cost-of-living differences between countries when comparing their GDPs.

3. Measure of Economic Welfare (MEW)

3. National Income + Indirect business taxes + deprecation.

4. imports

4. GDP minus depreciation of capital stock.

5. indirect business taxes

5. Uses relative nominal values of countries’ currencies to make international comparisons of GDP.

6. Net National Product

6. Homogenous goods should have same price everywhere if transactions costs are zero.

7. Purchasing power parity approach

7. Domestic production that is sold to foreigners.

8. Law of one price

8. Income taxed from one set of households and given to another set.

9. transfer payments

9. Sales, excise, and property taxes.

10. Exchange rate approach

10. Goods produced abroad and purchased by consumers in this country.

1 net private domestic investment

1. NI + transfer payments - corporate taxes -retained earnings.

2 value-added

2. C + I + G + (X - M)

3 personal income

3. Corporate income after taxes and dividends.

4 capital consumption allowance

4. A way to avoid the double-counting problem.

5 retained earnings

5. X - M

6 government purchases

6. Capital accumulation after adjusting for depreciation.

7 net exports

g) w + i + r + П

8 personal taxes

h) Plus transfer payments equals government outlays.

9 income approach

i) Subtracted from Personal Income to calculate Disposable

Personal Income

10 expenditure approach

j) Known by accountants as depreciation.