Macroeconomics: Discussion Questions

Macroeconomics : Discussion Questions

Discussion Question 1

1 . Why do national income accountants include only final goods and services in measuring GDP for a particular year ? Why don 't they include the value of the stocks and bonds bought and sold ? Why don 't they include the value of the used car bought and sold ? How do you or your firm contribute to the value of GDP

In the aspect of macroeconomics , economists measure and evaluate the current condition and characteristics of a certain region 's economy based on the production ability

and condition of the said population This economic production value is summarized under the computation of the Gross Domestic Product of said the region . GDP is mainly the summary of the value added at every stage of production of all final goods produced by the subject region in a given period of time . Its computation include the region added with the gross investment of the private sector at the given period and the summarizing the society

In particular , the computation of GDP only includes the final goods and services for a particular year . This does not include the value of stocks and used goods that are bought and sold . This is mainly because the value of the said goods have already been included during the particular period on which they are originally produced thus , the second term of their usage are not being considered as this would only result to redundancy in the computation . Thus , to come up with the proper and effective measurement of GDP value , goods are only measured during the period that they were originally produced at that particular period of time

Regarding the aspect of contribution towards the GDP value of the involved region , the business firms in particular have a significant influence to the generation of the GDP of their region . Business firms are considered to be in the private sector of the business economy and their gross investment or capital becomes their contributory value towards the GDP generation . For them to affect positively the GDP value of their economy , they can increase their gross investment value towards the economy such as expanding their operation or increasing their production at the period being considered . Through which , they can effectively increase the value of GDP in their region characterizing the growth in their economy

2 . Define consumption and MPC . What is your MPC has it increased or decreased through time

Another important element in the computation of GDP is the value of public consumption generated by the spending characteristics of the population . This is mainly the gross money value generated by the financial and economic transaction such as producing , buying , and selling of the population in the given period . Intuitively , higher consumption requires higher income for the population for them to have the financially capability to buy goods in the market . Increased in the consumption through this added with the increase in the production of goods being sold in the market would result to higher...