ECONOMIC ANALYSIS

Economic Analysis

Economic Analysis

Chapter 15, Question 14

According to the Bureau of Economic Analysis, one of the major limitations of national income accounts is that it ignores the importance of nonmarket production in the household, for example, meal preparation, cleaning, laundry, and childcare. Therefore, when these activities are ignored in the market, the value of production is overstated due to the decline in nonmarket production. Another limitation is the gray market and illegal activities, such as production and distribution of marijuana or gambling, which can be significant sources of support in economies but are not included.

Government services that are not subject to a market test will be worth less than they cost, even though cost is used as a measure of value. Another misleading image of the representative resident's well being is the unequal distribution of per capita income. In order to provide a better image of the economy, the NIPA has to adjust its account for various environmental considerations to keep our economies on a sustainable development path, replace conventional macroeconomic indicators with measures of welfare, and guarantee that a wide range of environmental and social impacts will be taken into accounts as we make decisions about economic growth or development towards consideration of other forms of well being (Mack, 2008).

Chapter 16, Question 6

The causes of hyperinflation are budget; they take in a show of excessive currency. In the event that an economy has more revenue to meet its expenditure, it will seek ways to address this lack of funding. It can appeal to lenders, but if the reputation of the state budget is compromised, it will face the distrust of lenders. This leaves her to raise the issue of money with the negative consequences that come up. The solution is again the budget; the state must cut spending and reduce the emission of currency. The combined effect of heavy repairs and financing of passive resistance as a result of the occupation of the Ruhr causes a widening deficit of the state. Finally, the decline in budgetary expenditure of the economy one-third reduction in the number of employees and reduction of repair following the Dawes Plan ends hyperinflation (Steve, 2008).

The following sets out the main elements of stabilization programs or to stop Hyperinflation

Fiscal Reform: Should be introduced measures to reduce the budget deficit in a credible way. This reform should be done both in terms of revenues and outlays. ...