ECO232 ch.2

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    What are national accounts?

    They describe macroeconomic indicators of the economy.

    When were national accounts developed in South Africa?

    They were established in 1960.

    What does GDP measure?

    It quantifies the market value of goods and services produced.

    How is GDP calculated?

    By summing the value of final goods and services produced.

    What distinguishes nominal GDP from real GDP?

    Nominal GDP uses current prices, while real GDP uses constant prices.

    What is the implication of using base year prices in GDP calculation?

    It allows for comparison of economic output over time.

    What happens if two firms merge in terms of GDP calculation?

    It changes the value of final goods produced.

    What is the unemployment rate?

    The ratio of unemployed individuals to the labor force.

    What is the difference between narrow and broad unemployment?

    Broad unemployment includes discouraged workers.

    Why do economists care about inflation?

    It affects income distribution and investment decisions.

    What does CPI measure?

    The cost of specific items and services over time.

    What are the short-run determinants of aggregate demand?

    Year-to-year changes in consumer confidence.

    What characterizes long-run determinants of aggregate demand?

    Factors like the education system and savings rate.