Business Economics Week 5

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Chapter 15, Question 14
What are some of the limitations of the national income accounts in how they represent our standard of living? In order to know the limitations of Americas National income accounts and how they represent our standard of living, it is necessary to know our GNP or Gross National Product. According to Chron.com, a business expert web site, it is the total output of our economy. It is said that the production output of America is directly related to how well we are living, our economy is doing, and also how well we are prepared for any sudden disruptions in the course our economy would take. With the GNP defined, one of the limitations that represents Americas standard of living would be services that are not considered in the GNP. These can still have an effect, but are not considered for various reasons including the government not gaining taxes from it or illegal activity. Any of these are understandable to not consider due to the fact that they are not something America can rely on as solid figures compared to an employer’s payout wages. This however is not something to totally ignore. These services are called Omission or Underestimation. The drug trade is a large black market, although there are no solid figures that economists have been able to gain due to the nature of product, it is widely known that much activity is involved in the trade which means large figures in the millions per year for how much dealers can make and buyers will spend.

Chapter 16, Question 5
Why is frictional unemployment important to have in any economy? This type of unemployment is beneficial to workers because it allows them to seek for jobs they want the most or jobs those best suits them. It also benefits companies, because it allows them to choose from among the best talent. The absence of frictional unemployment entails people to remain in the same jobs for life, creating a stagnant system that suppresses innovation and rusticates skills....
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