...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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...2- Measurement Theory Definition Measurement is being defined by many researchers. According to Campbell it is the assignment of numerals to represent properties of material systems other than numbers. A similar definition was given by Stevens who states measurement as the assignment of numerals to objects or events according to rules. Whatever the definitions given by all the researchers, they all bring about to the same meaning and understanding. Based on my understanding, measurement is the process of observing, recording and calculating the observations that are collected as part of a research effort which is usually represented by units. These units possess values and are often numerical. Importance Everyone uses measurement without even noticing it sometimes. In studying measurement theory, I realised that measurement involve in many of our daily activities without us even noticing it sometimes. Some examples include measuring our heights and weights, measuring the nearest and shortest distance to get to class, measuring the time taken to complete an assignment and many more. Therefore, it can be said that measurement theory is definitely important and useful for everyone. Understanding the importance of measurement theory is crucial to address issues in business, accounting, social and economics. Importance of measurement in Accounting Why is measurement theory important? Well, it is important for three simple reasons. It is important to make decisions, assess performance...
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...Differs from Microeconomics (b) Economic Theory: A Process of Simplification 3. Actual and Natural Real GDP (a) Unemployment: Actual and Natural (b) Real GDP and the Three Macro Concepts 4. Macroeconomics in the Short Run and Long Run (a) The Short Run: Business Cycles (b) Business Cycle Concepts (c) The Long Run: Economic Growth 5. Case Study: A Century of Business Cycles (a) Real GDP (b) Unemployment 6. Macroeconomics at the Extremes (a) Unemployment in the Great Depression, 1929–40 (b) The German Hyperinflation of 1922–23 (c) Fast and Slow Growth in Asia 7. Taming Business Cycles: Stabilization Policy (a) The Role of Stabilization Policy 8. The “Internationalization” of Macroeconomics IP* Box: How Does U.S. Economic Performance Rank? ( Chapter Overview Chapter 1 begins by introducing a set of three central macroeconomic concepts, called the “Big Three Concepts of Macroeconomics. They are the unemployment rate, the inflation rate, and productivity growth. Introducing the field of macroeconomics to students in this way has an important advantage. It facilitates the early introduction and definition of basic macroeconomic terminology, which gives students a chance to get used to thinking of macroeconomic issues in terms of these concepts. A brief section describes the differences between macroeconomics and microeconomics and discusses the role of theory. The purpose of theory is to simplify complex economic relationships...
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...assumed, or whatever other factor, could not be decided based on this evidence. This was less a problem in early development economics when development was looked upon as (lack of) physical capital accumulation (see for example Lewis 1955). As physical capital accumulation was inserted in the growth accounting exercise, the TFP growth could simply be interpreted as technological growth. Yet, with the rising importance of other, social, indicators such as health, literacy, and human capital, the growth of TFP could reflect the growth of these social indicators as well. 4.2 A classic view: GDP and physical capital On the basis of per capita GDP data provided by Maddison (2003), we may conclude that the levels of per capita GDP were about equal in India, Indonesia, and Japan around 1800. However, in the course of the nineteenth century they started to diverge. In 1890 Japan was already clearly ahead, having a gap in per capita GDP of 35% with Indonesia and 65% with India (see figure 1.1). Indeed, figure 1.1 shows that from 1870 onward there was a strong divergence in per capita GDP between on the one hand Japan and on the other hand India and Indonesia.4 This divergence accelerated after World War II. A second finding from figure 1.1 is that the Indian GDP is somewhat below the Asian average since as early as 1890. Although this gap closed slightly during the 1940s, mainly because India was far less hit by the War than most...
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...Statement to generate interest Relevant background information Definition of key terms Main purpose/argument of the paper Mention of mainly referenced authors Indication of research methods and results Indication of the viewpoint taken The structure/organisation of the paper 6 Example sentences “A recession is a temporary decrease in trade and industrial activity. In this paper, the common specific definition of a fall in GDP in two successive quarters will be used.” Statement to generate interest Relevant background information Definition of key terms Main purpose/argument of the paper Mention of mainly referenced authors Indication of research methods and results Indication of the viewpoint taken The structure/organisation of the paper 7 Example sentences “A recession is a temporary decrease in trade and industrial activity. In this paper, the common specific definition of a fall in GDP in two successive quarters will be used.” Statement to generate interest Relevant background information Definition of key terms Main purpose/argument of the paper Mention of mainly referenced authors Indication of research methods and results Indication of the viewpoint taken The structure/organisation of the paper 8 Example sentences “The first section explains why good corporate governance is important for economic prosperity. The second section discusses the example of...
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...PAE Y [C cT I G X ] c(1 t )Y P Solve for equilibrium GDP Y [1 c(1 t )] [C cT I P G X ] Ye 1 [C cT I P G X ] [1 c(1 t )] 3 Recap Week 6: Keynesian model – recessionary gap . PAE (planned aggregate expenditure) PAE = Cd + IP + G + X 0 IP+ G + X IP + G IP Y* Y (= GDP) Starting at potential output (Y*), a fall in exogenous C, I, G, NX will lead to a recessionary gap 4 Recap Week 6: If we assume that the planned aggregate expenditure is given by the equation PAE = 960 + 0.8Y a 10-unit drop in exogenous expenditure would result in a _____________ in short-run equilibrium output. A. 50-unit decline B. 40-unit decline C. 950-unit decline D. 4-unit decline 5 Recap Week 6: Keynesian model – recessionary gap . PAE (planned aggregate expenditure) PAE = C + IP + G + NX 0 Ye Y* I P + G + NX IP + G IP Y (= GDP) Recessionary gap 6 Recap Week 6: Keynesian model – expansionary gap . PAE (planned aggregate expenditure) PAE = C + IP + G + NX I P + G + NX IP + G 0 IP Y* Ye Expansionary gap Y (= GDP) 7 Recap Week 6: Multipliers The government expenditure multiplier is greater than the tax/transfers multiplier Withdrawals – higher income taxes and imports – reduce the impact of the multipliers 8 Recap Week 6: The short-run effect of equilibrium GDP of an equal change in government expenditure and net...
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...Cambridge Resources for the IB Diploma Paper 1 (SL and HL) markschemes Examples of markschemes for Exam practice: paper 1 in the Economics for the IB Diploma CD-ROM are provided below. Paper 1 section A: Microeconomics Chapter 2 Competitive markets: demand and supply SL/HL core topics Part (a) questions 2.3 (a) Answers may include: • Definitions of demand and quantity demanded. • Theory of demand: law of demand with reference to changes in demand and factors that can cause changes in demand. • Demand and supply diagram showing initial equilibrium price and quantity, and a leftward shift in the demand curve, resulting in a lower equilibrium price and quantity and showing that there is no contradiction. • Examples of demand curve shifts and movements along a demand curve. Answers may include: • Definitions of supply and quantity supplied. • Theory of supply: the law of supply with reference to changes in supply and factors that can cause changes in supply. • Demand and supply diagram showing initial equilibrium price and quantity, and a rightward shift in the supply curve, resulting in a lower equilibrium price and greater equilibrium quantity. • Examples of supply curve shifts and movements along a supply curve. Answers may include: • Definitions of normal good, excess demand, reallocation of resources. • Theory of demand and supply with reference to excess demand, the factors that can cause shifts in the demand curve and the role...
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...Examine the problems of defining and measuring development Sociologists have been divided on the issue of defining and measuring development. Development can be measured in many ways. For example, the Gross Domestic Product, the Human Development Index, the Quality of Life Index, the Gross National Happiness Index and the Millennium Development Goals. Development is also defined in many ways, for example the three world theory, the northern and southern hemisphere and the economically developed countries. Gross Domestic Product (GPD) is a way of measuring development which focuses on economic growth. GDP is the total value of all goods and services the country produces. A high GDP indicates a productive economy, where wealth will filter down to improve standard of life for society. However, critics note that this does not account for the distribution of wealth within a country so wealth could be concentrated in the elite groups oppose to being equally issued. Furthermore, the approach is based on Western capitalist ideologies that see wealth as synonymous with the well-being, ignoring the potential negative effects of rapid and unrestricted accumulation of profit. The data can be unreliable which would make it incomparable between countries. Another way in which to measure development is Human Development Index (HDI). This is a combination of scores of education, wealth and life expectancy between 0 (least developed) and 1 (most developed). The HDI is not completely comprehensive...
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...recent few decades, the development of traditional manufacture is restricted as a result of the limitation of both capital and nature resources. Simultaneously, entrepreneurship and innovation are attached more and more importance in enhancing sustainable economic growth. Therefore, there is a need to explore the genuine relationship between entrepreneurship, innovation and economic development. Entrepreneurship has numerous definitions and one of the most acknowledged literatures is Schumpeter’s (1934) theory which viewed entrepreneurship as a creative reply to a problem or opportunity. On the other hand, innovation is simply doing something in a way which is new, different and better (Wickham, 2006). Nonetheless, in the process of realizing economic growth, problems will definitely occur and thus creativity and problem solving capabilities may play a significant role in the relationships above. While it may be true that innovation, as a crucial part of the entrepreneurial process, and entrepreneurship both have positive effects on economic growth, the overall GDP of a domain country will decrease as the rate of entrepreneurship has been driven above the equilibrium. At the same time, creativity and problem solving are fundamental in these relationships. This essay aims to deeply illustrate the relationship between entrepreneurship, innovation and economic growth separately through theoretical literature and empirical evidence in section 2, then in section 3...
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...gross domestic product (GDP) is one of the most important indicators of economic performance. A rise in real GDP indicates economic growth, while a drop in real GDP indicates economic “decay” (Collinge & Ayers, 2004). By definition, GDP is the market value of the final goods and services produced in the economy within some time period, usually one quarter or one year (Collinge & Ayers, p. 425). Evidence from the CIA Factbook (2014) reveals quite a bit about what factors are important to growth, as the United States (U.S.) has a history of increasing real GDP. For instance, “the U.S. has the largest and most technologically powerful economy in the world” with a per capita GDP of $49, 800, a nominal GDP of $16.72 trillion (PPP) and GDP real growth rate of 1.6% (2013 est.). “New growth theory stresses the association between productivity growth over time and technological advances that are embodied in new capital. Since no one can know beforehand which lines of research will prove fruitful and which will fail, economies that handsomely reward productive ideas will grow the fastest” (Collinge & Ayers, 2004, p. 383). Similarly, China plays a major global role. Measured on purchasing power parity (PPP) of $13.39 trillion, China in 2013 stood as the second largest economy on the planet (after the United States) due to the value of services it produces. Still, per capita income is below the world average. Her GDP per capita is $9,800, with a GDP real growth of 7.7% (2013...
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...Version 1 General Certificate of Education (A-level) January 2013 Economics ECON2 (Specification 2140) Unit 2: The National Economy Final Mark Scheme Mark schemes are prepared by the Principal Examiner and considered, together with the relevant questions, by a panel of subject teachers. This mark scheme includes any amendments made at the standardisation events which all examiners participate in and is the scheme which was used by them in this examination. The standardisation process ensures that the mark scheme covers the candidates’ responses to questions and that every examiner understands and applies it in the same correct way. As preparation for standardisation each examiner analyses a number of candidates’ scripts: alternative answers not already covered by the mark scheme are discussed and legislated for. If, after the standardisation process, examiners encounter unusual answers which have not been raised they are required to refer these to the Principal Examiner. It must be stressed that a mark scheme is a working document, in many cases further developed and expanded on the basis of candidates’ reactions to a particular paper. Assumptions about future mark schemes on the basis of one year’s document should be avoided; whilst the guiding principles of assessment remain constant, details will change, depending...
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...SMEs. It is acknowledge that small and medium enterprise play a great role in develop the world, unlike in developed where the benefits through high cost such as lost of scale production, inefficiency and appalling employment conditions. In this facet of a country’s economy, labor plays a great role which is for most SMEs are labor intensive in developing the world. 2.1 BACKGROUND OF THE STUDY Productivity is an important aspect of the construction industry that may be used as an index for measuring the efficiency of production. Consequently, it can also serve to measure the status of economic growth and related production from industrial and corporate perspectives. Many factors can be used to measure productivity. For example, managers can generate diverse productivity data that take into account the measured productivity and the factors that influence it. These data can...
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...Money and Inflation: A review to a Nepalese Context Money and Money Supply Money is the stock of assets that can be readily used to make transactions. Money supply is the quantity of money available in the economy. Money supply is considered as a major contributor to inflation. Monetary policy is the control over the money supply. Monetary policy is conducted by a country’s central bank. In Nepal, Nepal Rastra Bank serves as a central bank. There are different lags on the effect of money supply on inflation. M1 or Narrow Money Supply It is a category of the money supply that includes all physical money such as coins and currency; it also includes demand deposits, which are checking accounts. M1 is used to quantify the amount of money in circulation. M1 is a very liquid measure of the money supply, as it contains cash and assets that can quickly be converted to currency. M1=Currency + demand deposits, travelers’ checks, other checkable deposits M2 or Broad Money Supply It is a category within the money supply that includes M1 in addition to total time-related deposits, savings deposits, and non institutional money market funds. M2 is used when looking to quantify the amount of money in circulation and trying to explain different economic monetary conditions. In Nepal, Broad money supply, M2 has a lagged and temporary effect on inflation. However, compared to other factors such as India’s inflation and international oil prices, M2 has a minor role in contributing to...
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...defined sections. The first section should contain essentially a statement of the problem. For example, “The economic way of thinking can shed some light on possible solutions to alcohol abuse. This paper will propose two policy options designed to reduce abuse.” Repeating and summarizing the question helps one keep in mind the problem to be solved and the exact tasks, propose two solutions. The second section should be an elaboration of the problem using economic thinking. For example, in the case of alcohol abuse, we might begin with “for the purposes of this paper the definition of alcohol abuse will be limited to the cases of excessive consumption of alcohol as a single event. In other words the discussion will not consider alcohol addictions, but only excessive consumption by the casual or social drinker. Additionally, for the purpose of the discussion it will be assumed that the abuse takes place in a setting in which there is potential for the behavior to have negative impacts on neighbors and the community. In other words there is a potential that private behavior by one person of group with have an adverse impact on others.” Once one has defined what one is going to be include in the behavior studied, then one can begin to define possible variables that may cause excess consumption. So section three is the modeling part of the analysis. For example, economic theory suggests that the quantity demanded will have an inverse relationship to the price. In the...
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...Cindy Williams | 10/29/2012 | International Trade and Finance In this world of ours there is so much competition. This is especially true between the United States and Japan, which make the same if not similar products of goods and services. The example for today is Toshiba and Dell computers. After the theories of integrative levels and of complex systems of the world trade organization the volume of trade was increased and high active participation allows them to specialize in what they all do best and enjoy the variety of the good and services. The economic system is really a big, free-flowing system which provides a market as well as it is the very life-line of our modern society. Human beings have traded and bartered with one another ever since earlier cultures; they knew at that time what a few still grapple with these days that trade is really a requirement. For that reason since trade was essential to the growth of earlier cultures, global trade is vital to contemporary cultures. By comparative advantage and opportunity costs evaluation a country may find out the items to export and import. The Exchange Rate The definition of Exchange Rate begins by saying that the price of one country’s money in definition of one country’s currency. This usually threatens and affects the export and/or import of many companies. This can also affect the stocks and stockholders from developing international funds. When the commodity of a country increased the currency of that...
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