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National Income Determination - Assignment Example

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Consumer confidence refers to the economic indicator that measures how consumers understand and interpret the current economic situation and what they expect. Investor confidence can have different meanings depending on the economic parameter. It may be defined as having…
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National Income Determination
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National Income Determination al Affiliation) Media on consumer and investor confidence Consumer confidence refers to the economic indicator that measures how consumers understand and interpret the current economic situation and what they expect. Investor confidence can have different meanings depending on the economic parameter. It may be defined as having confidence investments paying expected income or investments protecting capital value (Godley,
2009). It is therefore important for media to inform the nation on these two aspects since they are economically important.
Economic impact of confidence in economic agents
Various economists have constantly claimed that lack of confidence is a major reason that facilitates financial defaults. It is therefore clear that confidence in economic agents is an important principle in the economic sector. One economist argued that confidence in economic agents could at times be considered as a social capital (Godley, 2009). Therefore, an increase in confidence of economic agents should always affect the macroeconomic variables positively.
Factors that cause increase in consumer spending and investor investment
Consumer confidence – a higher confidence by the consumers will always facilitate them to spend more. Interest rates – it always influence cost of borrowing and mortgage interest payments. Higher interest rates will automatically increase cost of spending on mortgages. Availability of market – the increase in population constantly increases the demand for products that are specifically supporting the modern technology. Investors therefore identify such opportunities and utilize them effectively.
Consumer and investor trend reports will automatically affect my spending. This is because i will spend focusing on factors that may hinder my satisfaction as a consumer. I will therefore appropriately plan with the amount of money I have at hand.
Gross Domestic Product
GDP refers to the measure of total value of all goods produced and services provided in a country during a specific time, which is always one year. For an item to be included in the GDP, it has to be something that is produced within the borders of a country, should not be used to produce other goods and it should be legal. The exclusion therefore does not make GDP less informative.
Some of the items that are not included in the GDP are sales of goods that were produced outside a country’s domestic borders and transfer items made by the government (Godley,
2009).The impact of such exclusion enables a country to know its exact potential in production.
Reference
Godley, W. (2009). Money, finance, and national income determination. Annandale-On-Hudson, N.Y.: Jerome Levy Economics Institute, Bard College Read More
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