Running Header: PROJECT PART II

Project Part II

PROJECT PART II

What are some of the limitations of the national income accounts in how they represent our standard of living?

In a monetary economy, where trade is conducted through the currency, national income is central to the theory of equilibrium of the economy. It is the sum of consumer spending and savings during the period, and at the same time it is worth the consideration of the overall product, consumer goods and investment.

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. It is the total output of and economy, our economy in this case. It is said that the production output 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.

The problem is that that looking at national income accounts only gives us an idea of the quantitative arena of the standard of living of a given region and not the qualitative arena of their life. For example, those income accounts will give us an idea of the amount of money that each family has on average and per capita. However, they do not give an idea of the areas that deal with the quality of life. There may be two countries that have similar income levels on average but one country has a much higher level of education and life expectancy for their country as opposed to the other one. Even though they have similar income levels and GNP measures, you could argue that one country still has a far better standard of living due to the non-monetary aspects (education and life expectancy).

How hyperinflation has such devastating impact on economies. What it takes to stop hyperinflation?

Increase in the general price level of goods and service is called inflation. Inflation decreases the purchasing power of money as now each unit of currency buys less due to the increase in prices of goods and services. Hyperinflation is a phrase mentioning inflationary activity that is regarded to be increase at a rapid rate and completely out of control. Many ...