Hannah Overly
Professor Hale
April 22, 2016
Final Paper
A Look into the Principles of Macroeconomics: Project Paper
Q: What is the gross domestic product?
A: Gross domestic product (GDP) is the total market value of all final goods and services produced within an economy in a given year. This is also commonly referred to as total output (O 'Sullivan, 100).
Q: Do increases in gross domestic product necessarily translate into improvements in the welfare of citizens? Explain your answer.
A: Increases in gross domestic product do not always translate into improvements in the welfare of citizens. Despite GDP being the best measure of output value within an economy it has so many moving parts that can cause slips in solid correlations …show more content…
Several factors contribute to the weights of technological progress including the following: research and development funding, monopolies that spur innovation, scale of the market, induced innovations, education, human capital, and the accumulation of knowledge. Research and development allocations from the United States government have solidified the argument that support breeds progress. Because funding was allocated to American research movement’s vast strides were made in the technological world, including the internet. Monopolies tend to spur innovation because they encourage competition and incentives. When the industry sees that someone is making big strides in the way of innovation they want to exceed it so that they themselves can reap similar rewards whether it be monetary or socially. The scale of the market is also a vital part to consider when looking into technological progress because it creates an inventors environment. For example, “in larger markets, firms have more incentives to come up with new products and new methods for production (O 'Sullivan, 173).”Induced innovations stem from challenges when cut backs are being implemented or supplies are scarce and innovators must get creative and rise to the occasion of forcing change. Education, Human Capital, and the Accumulation of knowledge …show more content…
A: Governments decrease taxes in an attempt to increase consumer spending and grow aggregate demand which correlate with economic output. An example of this occurring features the term of President Ronald Regan. President Regan favored a supply side economy which emphasized cutting taxes which helped form better economic climates encouraging economic incentives and stimulation.
Q: If a government increases spending by $10 billion, could total GDP increase by more than $10 billion? Explain.
A: If the government increased spending by $10 billion the GDP could surpass a mark of just $10 billion because of the multiplier effect. Initially the GDP would only show the increase of $10 billion but as time moves on one would begin to see the effects of the multiplier which is “the ratio of the initial shift in the aggregate demand to the initial shift in the aggregate demand” (O 'Sullivan, 192). This theory by John Maynard Keynes supports the idea that when the government increases spending output will act similarly and also increase creating a domino effect that will help to exceed initial monetary
Professor Hale
April 22, 2016
Final Paper
A Look into the Principles of Macroeconomics: Project Paper
Q: What is the gross domestic product?
A: Gross domestic product (GDP) is the total market value of all final goods and services produced within an economy in a given year. This is also commonly referred to as total output (O 'Sullivan, 100).
Q: Do increases in gross domestic product necessarily translate into improvements in the welfare of citizens? Explain your answer.
A: Increases in gross domestic product do not always translate into improvements in the welfare of citizens. Despite GDP being the best measure of output value within an economy it has so many moving parts that can cause slips in solid correlations …show more content…
Several factors contribute to the weights of technological progress including the following: research and development funding, monopolies that spur innovation, scale of the market, induced innovations, education, human capital, and the accumulation of knowledge. Research and development allocations from the United States government have solidified the argument that support breeds progress. Because funding was allocated to American research movement’s vast strides were made in the technological world, including the internet. Monopolies tend to spur innovation because they encourage competition and incentives. When the industry sees that someone is making big strides in the way of innovation they want to exceed it so that they themselves can reap similar rewards whether it be monetary or socially. The scale of the market is also a vital part to consider when looking into technological progress because it creates an inventors environment. For example, “in larger markets, firms have more incentives to come up with new products and new methods for production (O 'Sullivan, 173).”Induced innovations stem from challenges when cut backs are being implemented or supplies are scarce and innovators must get creative and rise to the occasion of forcing change. Education, Human Capital, and the Accumulation of knowledge …show more content…
A: Governments decrease taxes in an attempt to increase consumer spending and grow aggregate demand which correlate with economic output. An example of this occurring features the term of President Ronald Regan. President Regan favored a supply side economy which emphasized cutting taxes which helped form better economic climates encouraging economic incentives and stimulation.
Q: If a government increases spending by $10 billion, could total GDP increase by more than $10 billion? Explain.
A: If the government increased spending by $10 billion the GDP could surpass a mark of just $10 billion because of the multiplier effect. Initially the GDP would only show the increase of $10 billion but as time moves on one would begin to see the effects of the multiplier which is “the ratio of the initial shift in the aggregate demand to the initial shift in the aggregate demand” (O 'Sullivan, 192). This theory by John Maynard Keynes supports the idea that when the government increases spending output will act similarly and also increase creating a domino effect that will help to exceed initial monetary