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ECON 20210 Cheat Sheet (DRAFT) by

Study Sheet for ECON 20210

This is a draft cheat sheet. It is a work in progress and is not finished yet.

Aggregates - GDP

Definition of GDP: the total value of final goods produced and services provided on a given territory during a given period at the market prices.

Aggregates - GNP

Definition of GNP: the total value of final goods produced and services provided by citizens of a given nation during a given period at market prices.

Aggregates - dichot­omies

Flux:
Stock:
An amount of change in a quantity during a given period. Example: GDP.
A quantity that accumu­lates over time. A definite quantity. Example: The national debt.
Gross:
Net:
Gross refers to a total amount made but doesn't account for expenses, losses, etc. Ex: GDP includes deprec­iation
A quantity including deduct­ions. Ex: NDP = GDP - deprec­iation. Net income = revenue - costs, taxes, interest, etc.
Real:
Nominal:
The real value of a figure is its value in terms of some other good, service or bundle of goods. Ex: Real GDP is current GDP relative to the prices of some base year.
The value of a good in terms of money. Ex: 2012 U.S GDP was $16 trillion.

Aggregates - Measur­ements of GDP

GDP:
f(Kt,N­t,At)
wtNt+(­rt+­d)K­t+PIt
Ct + Gt + Xt + It
Kt = capital. Machines, factories, etc.
Nt = labor, hours people work
At = Produc­tivity. How productive is this territory
wt = wages, employee compen­sation
rt = rate of interest
d = deprec­iation
PIt = profits
Ct = consum­ption
It = Gross investment = Kt.1 - Kt(1-d). Net Investment = Kt.1 - Kt
Gt = Government expend­iture
Xt = net exports = exp - imports

A - How do we detrend a variable and why?

So that we can better observe the cyclical component of the data. Example: GDP is constantly growing but if we detrend we can better observe the cyclical component of the data. We can use techniques such as an HP filter to detrend.

A - Popula­tions and Unempl­oyment

Popula­tion:
Includes labor force and everyone else.
Labor force:
Includes unemployed and employed.
employed:
Currently working
Unempl­oyed:
- Of working age

Aggregates - Inflation

Inflation: The rate at which the general level of prices for goods and services is rising, and, subseq­uently, purchasing power is falling. Can be approx­imated using:
gdp deflator = nominal gdp/real gdp * 100.
and