Gm545 Project 2

PROJECT TWO

BUSINESS ECONOMICS

GM545

SPRING B 2012

Chapter 15 Question 14

National income accounts (NIA) are fundamental aggregate statistics in macroeconomic analysis (Ott, 2008). National income accounting is based on double –entry book-keeping. The NIA gives a clear picture of the economy in regards to the gross domestic product (GDP). However it does not take into account household jobs such childcare, house cleaning, yard work etc. Transactions that do not have any records are not covered. As well as illegal activities drug sales.

When comparing the per capita gross national product (GNP) of different nations allows the economist to view the standard of living elsewhere. A country has a higher standard of living if that countries GNP is higher than another country. Gross national product is the total value of all final goods and services that are produced in a country during a year. (National Income Accounts 2012).

Gary Becker thinks that NIA could be better by including the value of time spent at home and the value of a longer life expectancy. He has proposed an alternative to NIA to account time use and emotional well being called National Time Accounting (NTA). In 1968 Robert F. Kennedy said about NIA.

It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our

compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.

Chapter 16 Question 5

Frictional unemployment is one of three kinds of unemployment. The others are structural and cyclical. Frictional unemployment is a natural part of a country’s economy. Frictional unemployment refers to those workers who could be in between jobs, college graduates. This happens when people move to another town or state without having a job in the new location. The label also applies to those have decided to quit their jobs before getting another. Leaving the work force for personal reasons...