Gm 545 Paper 2

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Lindsey Mathis Business Economics Business Economics GM545 March/April 2013 Chapter 15 Question 6 National Income Accounting refers to the bookkeeping system that a national government uses to measure the level of the country’s economic activity in a given country’s economic activity in a given time period. It provides economies with detailed information that can be used to track the health of an economy and to forecast the future growth and development. It also provides insight into how well an economy is functioning, and when the money being generated and spent. There are various forms of national income such as Gross Domestic Product, Gross National Product, Net National Product, National Income, Disposal Income, and Personal Income. Standard of living is the levels of wealth, comfort, national goods, and necessities available to a certain class in a certain geographic area. “National income statistics allow for comparisons of one’s country’s output to another, comparing economic growth of countries at a particular time and over a period of time, economic planning and also in comparing the standard of living of one country with another” (National Income Accounting). There are some limitations to indicate the standard of living. One of the problems in measuring national output where there are instances of unrecorded items such as babysitting or where underground economies exist. Another limitation is total GDP/GNP figures ignore the distribution of income. GDP doesn’t take disparity in incomes between the rich and poor into account. Chapter 16 Question 5 Frictional unemployment is the time period between jobs when a worker is searching for or transitioning from one job to another. This type of unemployment is important to the economy because it
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