StudentShare
Search

# Fundamentals of Micro and Macroeconomics: Calculating Gross Domestic Product - Assignment Example

Summary
The writer of the following assignment "Fundamentals of Micro and Macroeconomics: Calculating Gross Domestic Product" will provide the understanding of the economy and the variables that contribute to the growth of the GDP are of importance to the economic players…

## Extract of sample "Fundamentals of Micro and Macroeconomics: Calculating Gross Domestic Product"

Download file to see previous pages There are instances in which the price might not affect the quantity of goods supplied by the producers. Where the increased demand arising from the expected future increase in prices is accompanied by commensurate increase in the quantity supplied then no changes in price will be realized. An outward shift number ply curve will lead to maintenance of the price levels. Figure 1 From the above figure, it can be shown that the initial equilibrium a quantity is Q0 and the original price is P0. Because of the expected future increases in price, the demand curve shifts from D0D0 to D1D1 making the price increases. Because of the rise in prices, suppliers will be stimulated to increase the quantity of their supplies hence lowering the prices at the market. The shift of the supply curve from S0S0 to S1S1 changes the equilibrium quantity from Q0 to Q1 without an increase in the prices of the commodity. c) The three approaches in the determination of the GDP often results in different values. Whereas the income approach to the determination of GDP focuses on the totals of the income earned by the providers of factors of production, the expenditure approach sums the amount paid for final goods and services by the households and the government (Hansen 167). There are several reasons that cause these differences. First, the problem in double entry could have significantly caused varying values. By including intermediate goods, the GDP value could have been inflated. At the same time, the income approach to measuring the GDP might have omitted some of the income earned by the providers of factors of production. For example, the approach is prone to omitting income of the private sector due to lack of records. Some of the income of homemakers and even income from illegal activities are always omitted thereby making the total of the approach slightly lower than the expenditure approach. Nonetheless, the conflicting totals might have been caused by calculation errors. Wrong additions and inclusion of values in the calculation of the GDP always impair the accuracy of the GDP. Economists can correct the above causes in a difference in the level of GDP using the two approaches. To begin with, only the expenditure on final goods and services should be used in the expenditure approach must be used if the problem of double entry is to be avoided. Secondly, the income approach should also incorporate all the incomes of the suppliers’ of the factors of production if a correct value of GDP is to be arrived at. The income from illegal activities and those from the informal sectors of the economy like salaries of homemakers should be included. Moreover, the methods from the two approaches should be harmonized to reach an amicable value.  ...Download file to see next pagesRead More
Cite this document
• APA
• MLA
• CHICAGO
(“Micro and Macroeconomics Essay Example | Topics and Well Written Essays - 2000 words”, n.d.)
(Micro and Macroeconomics Essay Example | Topics and Well Written Essays - 2000 Words)
https://studentshare.org/macro-microeconomics/1443108-love-macroeconomics.
“Micro and Macroeconomics Essay Example | Topics and Well Written Essays - 2000 Words”, n.d. https://studentshare.org/macro-microeconomics/1443108-love-macroeconomics.
Click to create a comment or rate a document

## CHECK THESE SAMPLES OF Fundamentals of Micro and Macroeconomics: Calculating Gross Domestic Product

### Domestic Violence and Developmental Psychology

...Domestic Violence and Developmental Psychology Psychology can be applied from two perspective axis. The vertical axis can be behavioral psychology,psicoanalysis, humanist psychology, or transpersonal psychology (spiritual psychology). The horizontal axis is developmental psychology since it deals with the different stages of a lifespan of anybody. It is like a poem, which is vertical to time, and a short-story, which is horizontal to time. The same comparison can be made between psychology and literature. In this paper these perspectives will be taken into consideration, and they help to understand why there is a mixture of developmental psychology with humanistic psychology. The Centre for Children & Families in the Justice System...
11 Pages(2750 words)Assignment

### The Launch of Kones New Product

Political: 90% of Kone’s sales come from international markets. This makes it very vulnerable to political stability in its global markets for example Italy is one of the markets of Kone and elevator regulations are governed in Italy by parliament. Thus, to bring MonoSpace i.e. an elevator without a machine room in compliance with standards, it would require an act by the parliament.
Economical: The performance of the elevator industry is directly proportional to the performance of the construction industry. The construction industry has a maximum potential in developing countries rather than in developed countries. The reason for this is that the developed countries have maximized their growth potential whereas the dev...
12 Pages(3000 words)Case Study

### Fundamentals of Finance

It is the size of the company that decides the role of financial management in a firm. In small firms, financial management is handled normally by the accounting department but in large entities, a separate department under the leadership of its CFO takes care of its financial management. Broadly “the financial manager of a firm plays an important role in a company’s goals, policies and financial success. The financial manager’s responsibility includes financial analysis and planning- determining the proper amount of funds to employ in the firm, i.e. designating the size of a firm and its growth; investment decisions- the efficient allocation of funds to specific assets; financing and capital structure decisions-...
11 Pages(2750 words)Assignment

### Gross Domestic Product and the Nations Competency in Terms of Economic Welfare

It is often used to compare the economic performance to aid as a prediction tool and to analyze the business cycles and the recessive and expansive economic performances within them. This further aid economic and fiscal policy formulation of the government and is also used to analyze the consumer behavior and the economic phenomena involved. (Heakal, R. 2008).These figures can be a benchmark to compare economies of different nations and the economic prediction process is also made possible.

A usual pattern of assessing the Gross Domestic Product is to have an initial GDP report on every quarter which is an advance report. Two corrective reports follow this before the final figures on GDP are arrived at. It usually takes...
7 Pages(1750 words)Report

### Oil Prices by OPEC and Market Fundamentals

Market failure is defined as the inefficient allocation of resources by the market, the free market is considered to optimally prices and resources in the production of goods and services, and this is because the price and quantity produced are determined by market forces which include the demand and the supply. The control of prices by a firm or an organization in the market results in market failure, therefore OPEC leads to market failure due to its nature in the market.

OPEC was formed in 1960 by 5 oil-producing countries which include Venezuela, Saudi Arabia, Kuwait, Iran and Iraq, The aim of this organization was to unify petroleum-producing countries in order to realize fair and stable prices of oil .other oil-pro...
6 Pages(1500 words)Report

Keynes argued that prices and wages do not determine the level of employment, as many classical economists suggested, but instead the level of aggregate demand for goods and services (Case & Fair 683). Keynes realized as well during the Great Depression that the government could intervene in the economy to attain specific employment and output goals by either increasing or decreasing taxes and government spending.

For example, raising taxes will decrease the disposable income of households and thus effectively decreasing consumption. When the government decreases consumption, the household demand for goods and services decreases thus it would only seem reasonable that the amount of output that the economy would also...
7 Pages(1750 words)Article

### What Is Macroeconomics

While microeconomics is concerned with the factors underpinning the economic life of individual entities like families and small businesses, macroeconomics looks into the various elements that move or determine the economy in its entirety or what some call an aggregate economy. Macroeconomics is useful because it allows a predictive view of how market forces affect the economy and advises governments appropriate economic policies and gives private individuals and business entities a glimpse of what the future holds economically.
The term macroeconomics did not exist prior to the Great Depression but there was a collective set of theories that were used to study the various workings that influenced the aggregate economy. Econo...
8 Pages(2000 words)Assignment

### Intermediate Macroeconomics and Macroeconomic Coordination

...CHAPTER 04 (MACROECONOMIC COORDINATION) We know that when GDP, APE & ASF are unequal, than an interplay occurs (Macroeconomic coordination process) which bridges the gap between these variables. If there is a disparity between ADF & ASF, there will be an automatic reaction among money users & suppliers which restores the magnitude of these variables to equality generally known as funding adjustment. Similarly, if there is a difference in the values of GDP & APE, it will trigger the suppliers of goods & services to act together and bring the figure close to equality. This process is called output-price adjustment. The purchasers of the domestic output can be classified into three groups. Group 1 involves individuals having sufficient money...
6 Pages(1500 words)Assignment

### Green Product that Could be Offered in the Market

...Green Product or Service Wal-Mart is well known for its every day lowest prices products. It manages to provide these low costs because of its well optimized supply chain management. However, Wal-Mart has also come to be known for its initiatives in sustainability. The company started this initiative in 2005 as Lee Scott, the CEO, believed that “being a good steward of the environment and being profitable are not mutually exclusive. They are one and the same”. (greenhrm.org) Thus, the company recognized the importance of going green on sustainability much before the others in the business. As per their report, “ASDA Bootle is the first zero waste to landfill store in the UK, diverting 95% of the waste from landfills” (walmartstores.com...
6 Pages(1500 words)Essay

### The Issue of Domestic Violence and Abuse

... Domestic Violence Domestic violence is an oppressive behavior, used by one person in a relationship or marriage to control or exercise dominance to the other partner. Domestic violence and abuse is not only restricted to physical abuse but can also exist in psychological form. The people who exercise domestic violence on others usually do it to achieve one purpose only, to obtain and maintain absolute control over a victim or intimate partner. To achieve this goal, they expect to be obeyed without question, treating the victim as a child or a servant instead of an equal partner. They do not exercise fairness but use such methods like instilling fear, capitalizing on guilt, shame and intimidation on the other partner to keep them under...
7 Pages(1750 words)Case Study