Essay on Gross Domestic Product ( Gdp )

729 Words May 9th, 2016 3 Pages
1. Shrinking is when gross domestic product (GDP) decreases then the economy shrinks. Gross domestic product (GDP) is consumption + gross investment + government spending + (exports − imports). When consumption decrease that means people eat out less, save money, and buy cheap thing to survive. Gross investment is when people are selling stock not investing therefore GDP is decreasing. Government spending is fiscal policy that involve revenue raising and borrowing in the economy. We can reduce shrinking by increasing our GDP and to be fair with other counties that we trade with.
3. Diamond water paradox is the practical things that we use every day often has little to no value in exchange like water, spoons, socks, etc. And things that often have the greatest value in the market have little or no practical use like historic painting or a valuable sport card. Marginal utility is additional satisfaction or gain someone gets form using or purchasing an additions unit of a particular good or service. People are willing to pay higher price with greater marginal utility.
5. Efficiency is important to producers, consumers, and society as a whole because the resources are scarce, and the society have to decide how to use the resources for its max benefits. When a resource are used to produce goods and services it make it hard to use it for another goods d services. So the best way to understand economy allocation resource is to produce two goods at the time. In this type of…

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