...Project—— The real meaning of GDP I. Background Since 1985, when the State Council of China approved to establish a System of National Accounting (SNA), using the gross domestic product (GDP) to measure the national economy, more and more people are getting familiar to this word. We must have heard about it for countless times. At the end of 2010, China has overtaken Japan as the world's second biggest economy in terms of GDP, which has drawn attention all around the world and has made Chinese people proud of the rapid development over the past decade. However, there are still a large quantity of people in China or even in the world that know nothing about GDP. Moreover, still many people do not fully understand the real meaning of GDP even they have heard about this economic term before. GDP per capita is often considered an indicator of a country's standard of living whereas there are limitations and criticisms against the belief that GDP measures a country’s living standard. Many economists (for example, who? Add sources) argue that GDP is an empty abstraction devoid of any link to the real world, and, therefore, has little or no value in economic analysis. Many environmentalists (for example, who? Add sources) argue that GDP is a poor measure of social progress because it does not take harm to the environment into account. Thus, it is important to find out the real meaning of GDP and its value to economic analysis. II. Statement of the problem First , this report intends...
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...view that the key for US economic recovery is drastically lowering the number of unemployed Americans. Once more people will be employed, this is going to lift overall spending in the economy and consequently general economic activity will follow suit, so it is held. We suggest that unemployment is not the key issue for economic growth. What matters for individuals is not whether they are employed as such but the purchasing power of their earnings. The key for this is the infrastructure individuals utilize in the production of goods and services. What permits an increase of the production of goods and services and hence raises people’s living standards is an expansion and enhancement of infrastructure. What in turn permits this is an expanding pool of real savings. Contrary to popular thinking, the Fed’s and the government policies that are aiming at lowering unemployment don’t improve people’s living standards, but on the contrary they undermine the process of real wealth generation and thus set in motion an economic impoverishment. In fact the latest government data indicates that many more Americans have fallen below the poverty line in 2009 despite all the massive stimulus packages. For the time being, the latest US economic data remains subdued. Also in China a visible fall in the growth momentum of money supply M1 raises the likelihood of a visible fall ahead in economic activity indicators. Is a reduction in unemployment the key to US economic recovery? Most experts are...
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...macroeconomic issues that will be examined during this course are: 1) Economic Growth (change in the level of output) a) An outward shift in the PPC (production possibilities curve) due to an increase in the quantity or quality resources. b) An increase of real output (gross domestic product) or real output per capita. NB: Gross domestic product is the market value of all final goods and services produced within an economy for a given period. 2) Unemployment: The failure of an economy to fully utilise its entire labour force. 3) Inflation: A rise in the general level of prices in an economy. 4) The Balance of Payments: A summary of all the transactions that took place between the individuals, firms and government units of one nation and those of all other nations during a year. 5) Exchange Rates: The rate of exchange of one nation’s currency for another nation’s currency. A foreign firm would look at some key macroeconomic indicators so as to inform its decision as to whether or not it should invest in a particular country. These key macroeconomic indicators are: 1. Real Gross Domestic Product (Real GDP) 2. The unemployment rate 3. The inflation rate 4. The interest rate 5. The exchange rate 6. The level of the stock market Economic Growth and Business Cycles Economic Growth Economic growth has been defined generally as an increase in real GDP or real GDP per capita for a given time period. While both of the foregoing...
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...microeconomics that they learned in their introductory course: Chapter 1 focuses on the general subject of economics, while Chapter 2 develops supply and demand analysis. The use of examples in Chapter 1 facilitates students’ complete understanding of abstract economic concepts. Examples in this chapter discuss markets for prescription drugs (Section 1.2), introduction of a new automobile (Section 1.4), design of automobile emission standards (Section 1.4), the minimum wage (Section 1.3), the market for sweeteners (Section 1.3), and real and nominal prices of eggs and education (Section 1.3). Discussing some of these, or another, example is a useful way to review some important economic concepts such as scarcity, making tradeoffs, building economic models to explain how consumers and firms make decisions, and the distinction between competitive and non-competitive markets. Parts I and II of the text assume competitive markets, market power is discussed in Part III, and some consequences of market power are discussed in Part IV of the text. Review Question (2) illustrates the difference between positive and normative economics and provides for a productive class discussion. Other examples for discussion are available in Kearl, Pope, Whiting, and Wimmer, “A Confusion of Economists,” American Economic Review (May 1979). The chapter concludes with a discussion of real and nominal prices. Given our reliance on dollar prices in the chapters that follow, students should understand...
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...Abstract The economic instabilities and crisis which have direct effect on the well-being of the people in the society are caused by many issues and variables. People can work to earn income and improve their lives through all difficulties in the economic conditions. People also save some of their income for their future needs. Their save money would be affected by inflation and their purchasing power would be diminished. Inflation is mostly a matter of monetary policy which occurs when a government prints money without real asset backup more than the amount that is need for a stable economy. This study examined the effects of implementation of Islamic currency on the prevention of inflation and price instabilities. Economic students of IIUM were randomly given questionnaires about the agreeability of Islamic currency in today’s developed economy and its usefulness to prevent inflation. The survey showed that Islamic currency model (dinar and dirham) would be able to control inflation and instabilities of prices by having 100 percent of gold and silver reserves for every single amount of money circulating in the economy. Moreover, it is emphasized that Islamic governments should implement this model to overcome the problems people are facing by inflation which diminishes their purchasing power of saved money and their uncertainty in future investments. Keyword: Fiat money, Islamic currency, perception, inflation, economic growth. Islamic currency: The perception of IIUM...
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...Executive Summary The Real Estate Investment in China is considered a growing business in the future. China being one of most populous place, people are seeking better living places. By seeing this investment opportunity in China, our group was highly interested. We believe that China has considerable amounts of land for this opportunity and our business to grow. Real Estate demand is raising in China since their economy continues to increase as well as people is becoming more wealthier. With our resources and experience in the field, our investment will be on its way. This report outlines the investment specifications. It is outlined in these categories: Country Analysis, Real Investment Analysis, Specific Components of the Project, the Best Mode of Entry, and the investment Risks Involved. Each outline analyzes the investment’s specific opportunity given the condition of the country. Based on this analysis, our group made a conclusion. A final recommendation of the proposed investment is given below. Country Analysis China is a developing country that has a great opportunity for foreign investors 5to establish their international business and make profits. China has a booming investment market and based on our research, the Livecast states that China’s investment environment is improving in recent years. Take an example from the Livecast, many enterprises transferred their business to China and trying to reduce the investment loss during the economic crisis in 2008. As the...
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...Chapter 1 Exam – The Nature of Economics Multiple Choice. Choose the one alternative that best completes the statement or answers the question. 1) Economics is best defined as A) the study of how people make choices to satisfy their wants. B) the study of individual self—interests. C) the study of how government can most efficiently raise funds by taxation. D) the process by which goods are sold in free markets. 2) Microeconomics is defined as that part of economic analysis which A) studies the behavior of the economy as a whole. B) includes the problems of inflation and unemployment. C) studies the individual decision making by households and firms. D) concerns international finance and exchange rates. 3) In his book “An Inquiry into the Nature and Causes of the Wealth of Nations,” economist Adam Smith argued that individuals A) tend to act in an altruistic manner. B) always consider the impact of their actions on the welfare of others. C) are motivated by self—interest. D) are generally not concerned with economic questions. 4) When studying individuals’ economic behavior, economists assume that A) individuals understand the rationale for all their actions. B) individuals act as if they were rational. C) only educated people act as if they were rational. D) self—interest is of limited relevance in predicting an individual’s actions. 5) Holding all variables but one constant and assessing the impact of the one variable which has changed...
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...most useful in reducing unemployment. Governments often regard reducing unemployment as one of the main economic objectives. Unemployment is the existence that there is labour force able and willing to work but is unable to be employed (Bannock, Baxter, 2011). It tends to follow a cyclical pattern. In the early 1990s, the unemployment began to rise as economies around the world went into recession. On the other hand, in the mid-1990s, unemployment fell as the world was in the period of expansion. The UK is now in a very low level of unemployment. The causes of unemployment can be categorized into equilibrium unemployment and disequilibrium unemployment. It can be classical, cyclical, frictional and structural. This essay will first describe the main causes of unemployment. Then, it will survey the possible policies that can be adopted by the government to reduce these causes. Finally, it will evaluate the most useful policy. Disequilibrium unemployment is the condition that the supply of labour exceeds the demand of labour and the wages remain relatively unchanged (Gillespie, 2011). Classical (real wage) unemployment and cyclical (demand-deficient) unemployment are two possible causes of disequilibrium unemployment. Classical or real wage unemployment will happen when the real wage is high above the equilibrium (Begg, 2009). Because of the high real wages, more people are willing to work than are demanded. Gillespie (2011: 439) states that this occurs when trade unions push...
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...Principles of Macroeconomics, 9e - TB1 (Case/Fair/Oster) Chapter 18 Debates in Macroeconomics: Monetarism, New Classical Theory, and Supply-Side Economics 18.1 Keynesian Economics 1 Multiple Choice 1) Who wrote the General Theory of Employment, Interest, and Money? A) Adam Smith B) David Ricardo C) Milton Friedman D) John Maynard Keynes Answer: D Diff: 1 Topic: Keynesian Economics Skill: Fact 2) Keynesian economics includes the idea that A) economic policies are ineffective. B) the economy is basically stable. C) prices adjust to clear the markets. D) labor markets don't always clear due to wage rigidities. Answer: D Diff: 1 Topic: Keynesian Economics Skill: Fact 3) Among the propositions of the Keynesian school of thought is A) economic policies are ineffective. B) aggregate supply management is the key to a stable economy. C) aggregate demand determines equilibrium output. D) rational expectations. Answer: C Diff: 1 Topic: Keynesian Economics Skill: Fact 4) Keynes believed which of the following? A) The government has a role to play in fighting inflation, but not in fighting unemployment. B) The government has a role to play in fighting unemployment, but not in fighting inflation. ...
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...2013 Pierre Jolicoeur Final Research Paper 5/2/2013 2013 Pierre Jolicoeur Final Research Paper 5/2/2013 The Role of Entrepreneurial Class in Economic Development of LDCs The Role of Entrepreneurial Class in Economic Development of LDCs Table of Contents Page Abstract……………………………………………………………………………………………………………..2 I. Introduction…………………………………………………………………………………………….3 Statement of Problem……………………………………………………………………………..3 Objectives of study……………………………………………………………………………….…4 Definition of Terms…………………………………………………………………………….……4 Limitations………………………………………………………………………………………….……5 II. Literature Review…………………………………………………………….....5 III. Methodology…………………………………………………………………......6 IV. Results and Analysis……………………………………………………………..9 V. Summary and Conclusions……………………………………………………..12 Summary………………………………………………………………………………………………….12 Conclusions………………………………………………………………………………………………13 Recommendations……………………………………………………………………………………14 References……………………………………………………………………………………………….15 Abstract The uncertain global economic recovery and the worsening Eurozone crisis continue to undermine those factors that enabled the least developed countries (LDCs) as a group to attain higher growth rates between 2002 and 2008. Despite seeing real gross domestic product (GDP) grow slightly faster in 2010, the group as a whole performed less favorably in 2011, signaling challenges ahead. LDCs have been most affected...
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...has to repay would be worth less than when it was borrowed. In this way, one pays back less in real terms than one had borrowed. Those who may benefit from higher inflation are people with significant debt. Typically those most hard-hit are white-collar workers, teachers, pensioners, doctors, those on fixed incomes and those working for cash wages. These categories of people tend to have their wealth in savings, retirement funds and are, thus "creditors", whose future income will not be adjusted up as inflation rises. These people's incomes lag behind the speed of inflation making them poorer in irregular fits. Inflation, caused by a complex set of economic variables, is not a singular type of economic problem. Advantage – (pros) 1.People feel richer (money illusion) 2.Unexpected inflation benefits borrowers 3.Could be from extra growth in the economy or extra money which would lead to lower unemployment rates 4.If prices rise, then a currency devalues which would lead to growth in the export sector. 5. Moderate inflation enables adjustment of prices and wages, and inflation can also boost growth 6. Deflation is potentially very damaging to the economy and can lead to lower consumer spending and lower growth. For example, when prices are falling, consumers are encouraged to delay purchasing. 7. A moderate inflation rate reduces the real value of debt. If there is deflation, the real...
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...Principle of economics “Economics is about making choices when options are limited.” ((O'Sullivan, 2011 p.13) The world revolves around choice, and its made by all sorts of people. The economist job isn’t to choose for us but to help us understand the trade offs. Decisions are not made to be spontaneous. Therefore it takes a lot to consider what to buy, what occupation to pursue, and how money to save. Economist, understand this in all matters so the key questions are as follows; what products do we produce? How do we produce the products? Who consumes the products? (O'Sullivan, 2011 p.4) But this isn’t the only thing an economist considers, there also includes four elements to consider for decision-making. An economic way of thinking is through assumptions, isolate variables, think at the margin, and respond to incentives. (O'Sullivan, 2011 p.8) Real life situations, call for real life theories. One major real life problem is of alcohol abuse. Two economic solutions are to impose higher taxes, or increase the prices. Both of these would be considered a good solution because people act rationally in their own self-interest. (O'Sullivan, 2011 p.6) Imposing taxes or increasing the prices we would assume that every drink has the same alcohol effect towards people. To focus on the effects of alcohol abuse economist would make assumptions that imposing taxes and increasing prices would decrease alcohol consumption. Of course it also depends on the way that the inflation would...
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...Abstract Since 2005, real estate problem has become a hot topic, when two meetings convened life during, the central and local governments offer some corresponding measures, but also makes the real estate problem into hot issues the top spot. Real estate to measure a country's economy lost the rise. Real estate industry continues to heat up to China's economy will surely caused significant effects that have positive and negative. When the rise in house prices range in control and its influence will when outweigh the costs, conversely when house prices do not control, its influence will do more harm than good. Introduction Real estate prices question has been one of the important bothers Chinese governments, in my personal view, China's real estate prices continued to raise a few reasons. Was the total population growth, income level, continue to improve, housing costs rising prices, housing loan stimulation, rising expectations, etc. These reasons have been plagued by domestic real estate researchers, real estate prices also leads to national many influence. Its positive influence is can promote economic growth and increase GDP; Negative influence is can lead to inflation, expand the gap between rich and poor. 3.0 Research Methodology Choosing the topic and search the information on the Internet Neatening up the information I search from the Internet Collecting the data Making conclusions Analyzing the reasons by myself Coming up with the solutions...
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...Part A (10 marks) Question 1. Collect and present (in graph format), annual data for the years 2006 to 2014 showing the rate of growth of real GDP, the inflation rate, and the unemployment rate for Australia, the United States and one Euro-zone economy of your choice. Using the graphing tool in Excel, present three time-series line graphs: one for each economy containing all three variables. Label each axis, give your chart a title and state source of data. Graph 1: The 2006-2014 data of the GDP annual growth rate, the inflation rate, and the unemployment rate of Australia Source: data. World bank.org. Graph 2: The 2006-2014 data of the GDP annual growth rate, the inflation rate, and the unemployment rate of the United States Source: data. World bank.org. Graph 3: The 2006-2014 data of the GDP annual growth rate, the inflation rate, and the unemployment rate of France Source: data. World bank.org. Question 2. Using the data collected for Question 1 – covering the years 2006 to 2014 -, present three comparative line graphs. The first graph will show the rate of growth of real GDP of Australia, the USA and your chosen Euro-zone economy. The second comparative line graph will show the inflation rate of the three economies and the third line graph will show the unemployment rate of the three economies. Graph 4: The Comparison of the 2006-2014 GDP annual growth rates of Australia, the United States and France Source: data. World bank.org. Graph 5: The Comparison...
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...focus on the practices of real-life application. However, the intended goals of subjects may differ. Some seek to describe the world more; in other words, the initial purpose is to simply depict the already existing things, explain how they function and convert them into theories. Some others are more engaged with the physical world, seeking to transform things and promote major changes to the society. This leads to the knowledge question: to what extent do different areas of knowledge seek to describe the world and to what extent do they seek to transform it? In this essay, I am going to explore how Mathematics and Economics (as a Human Science) and their relationships with knowledge compare and contrast with each other. Mathematics has always been praised by people as the "language of the universe". That is to say, math describes the world, using a language that everyone can understand, regardless of different linguistic and cultural backgrounds. It is descriptive in nature, having been initially created because it was a necessary tool for human production and activities. The set of well-defined symbols of mathematics makes abstract ideas concrete for people to understand, utilize and therefore know about the world. Our ancestors tied knots on the ropes for counting, because there was a need to describe the numbers of objects; calculation appeared because any kind of business trading required addition, subtraction, multiplication and division; people developed the constant...
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