Questions

Questions

Part A

Question 1:

In analyses and forecasts on the state of the economy, a natural measure to use is GDP growth, i.e. the change in the volume of output. For example, when the mass media report the economic growth of a country, they normally refer to the increase in GDP. On the other hand, in analyses and comparisons of living standards between countries and over time, it is more relevant to study gross national income (GNI) in relation to the price of final domestic demand, i.e. consumption and investment. Moreover, GNI must be related to the population, that is, measured per inhabitant. Obviously, in comparing living standards between countries, but also growth, it is important to adjust for different rates of population growth (Erber 2002).

It is important to note that GDP only includes the total domestic production of an economy (as opposed to GNP which includes the total output of a country's businesses and people even if they are over-seas, even if their profit and investment is fully focused on the local economy). This is the output of the home economy of a country and thus excludes over-seas enterprises that may be taking place. In a world which is increasingly globalising and in which Trans-National countries are becoming increasingly important, this can be significant in some cases. For example Japan has many over-seas enterprises; particularly car-factories which often locate in the EU to produce cars for the EU there at a lower cost inside tax barriers imposed by the EU. However, these companies act somewhat as a drain to these EU economies and a boon to the Japanese economy as they send back considerable profits made to Japan to be used in further investment rather than directing money earned into the economy where the factory is located. In effect, consumer spending in the EU countries is still sent to the firms as expenditure for their services, but it is Japanese firms that the money is being sent to: it is foreign spending boosting the Japanese companies and thus indirectly their economy.

Question 2:

Criminologists working in both developed and developing countries occasionally insinuate that crime in developing countries requires a separate explanation. However, such an enterprise contradicts the generally accepted goal of parsimony in theorizing. While every culture in the world has the potential for generating rich insights into the nature and causes of crime, any explanation of crime in ...