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Therefore, scarcity will limit individuals on the basis of limited income, manpower and natural resources, and this puts a limit to the amount of products people have at their disposal.
An economy’s income must be equal to its spending so as to ensure that there is a favorable balance of payments in the economy. For every buyer of a product there must be a seller, and this means that GDP, which is utilized in measuring the levels of expenditure and incomes must be equal. If the expenditures are more than the incomes, there is unfavorable balance of payments, and this implies that the economy is falling apart.
The GDP deflator is used to measure the tracks of all new products that are produced domestically and represents the total worth of products produced in an economy in a specific period. The GDP deflator will measure the ratio of current price GDP to the real GDP and will show how much the change in GDP from the specific year relies on the changes in prices of products. The consumer price index (CPI) is used to study the total output of the economy, and it is a cost of living indicator and measures the total cost of products purchased by consumers I a country. It helps in determining the purchasing power currency has and compares this to past years to see determine the status of the economy.
Higher savings lead to higher standards of living because savings are the chief source of capital, which is to some extent the backbone of an economy. Savings will refer to accumulated funds, and this implies that an entrepreneur can use these funds to make an investment in the future. For example, when starting up a new venture, an entrepreneur will either use their savings or borrow from various institutions so as to fund the start up. If people could consume everything and not save, it implies that there will be no funds to be used in future in the event that an investment opportunity comes up. Moreover, when an
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The ability to maximize one’s profit is key. One theory is that this success might have to do with the fact that, according to Png and Lehman (2007), “[t]he profit-maximizing scale of operation is where marginal revenue equals marginal cost” (pp. 203).
Others point to the fact that markets are not perfect. Consider both viewpoints and respond to both sides of the issue with your viewpoints. In your own words, please post a response to the Discussion Board and comment on other postings. You will be graded on the quality of your postings.
The skills and knowledge attained by the degree holder will improve and increase the productivity hence the standard of living is improved as stated above. Question 5 A higher rate of saving leads to higher growth rate temporarily since, as the capital rises, leading to more productivity, it will reach some point whereby the capital will fall.
Econ reading and short essay questions Student Name: Tutor Name: Course: Date: . 1.) Answer Questions for Review #1 near the top of page 641 Money is combination of assets that used as a medium of exchange in an economy while commodity money is the value that an item has even if it has not been utilized as money for example; a gold (Mankiw, 2011).
The rate of unemployment in Germany has been around 5.4 percent by end of 2012. This is because the demand for labour is a derived demand and the low demand for German products from its 17 Euro countries. This is because of crisis in other parts of German markets such as Cyprus.
Washington consensus refers to a set of ten reform policies that were generated by one of the world’s economist called Williamson in 1989. He proposed a package of ten policies, which he believed to be essential for recovery of weakening economies especially in
The ‘labor theory of value’ states that the value of a service or good depends on the labor used in its production. The first proposer of this theory was Adam Smith. This theory suggests that goods should cost the same as the amount of time used to produce
I would adopt so that together with ht head of Production we can go back to the drawing board and discuss the feasibility of the whole project in view of the damaged machinery. Investing in another country can be an expensive venture with a lot which has to be taken into
These pose great dangers not only to the economy but also to the social and political world. Unemployment is an important issue of macroeconomic issue. This is where majority of the people in a country have no jobs. Unemployment could either be voluntarily or
However, at this price, the total market demand is 15 gallons per day. There would be a market shortage of 15-12 = 3 gallons per day.
The fourth of July fireworks might be considered a public good since no one can be
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