Questions and Answers

QUESTIONS AND ANSWERS

Questionsand Answers

Chapter15

Q1

GDPmeasures the value of all the finished goods and services that areproduced within the borders of a country in a given time. It isbetter to live in a country having a high level of GDP because thecountry can be in a position to provide its citizens with most of theproducts and services that are required for basic life.

Q8

Oneof the ways that the U.S. government tries to encourage advances intechnological knowledge entails supporting innovations, whereindividuals are encouraged to come up with new innovations thatencourage technology advancements. Another way entails puttingresources on research and development so that individuals can engagein research leading to technology advancement.

ApplicationProblem 1

Whenit comes to producing goods and services, a country is better placedif it can be in a position to produce most of its goods and services.Importing a lot of goods and services implies that a country usesmost of its resources in purchasing the goods and services used in acountry.

Chapter16

Q1

Itis important for the income of an economy to equal the expenditure soas to ensure that an economy does not run on unbudgeted funds.

Q5

Componentsof GDP include consumption, investment, government spending and netexports. An example of consumption entails resources used byhouseholds while investment can include resources used in purchasingequipments used by businesses. On the other hand, an example ofgovernment spending is payment of salaries to public servants whilenet exports can include payment for goods and services from a foreigncountry less goods and services sold to foreign countries.

Chapter17

Q1

GDPmeasures the value of all the finished goods and services that areproduced within the borders of a country in a given time. It isbetter to live in a country having a high level of GDP because thecountry can be in a position to provide its citizens with most of theproducts and services that are required for basic life.

ApplicationProblem

Incase a society decides to reduce consumption and increase investment,an economy is likely to grow an economy will experience growthemanating from the investments put in place. The groups that arelikely to benefit from this change would include investors andindividuals in the high class while individuals in the low class arelikely to be hurt.

References

Arnold,R. A. (2008). Economics.Mason, OH, USA: Thomson South-Western.