Free «Automobile from Japan» Essay Sample

The reason why the purchase of an Automobile from Japan doesn’t increase U.S GDP even if it is counted as consumption is because since the car was produced by a Japanese Company, it still counts in their GDP even if it was manufactured at one of their U.S Plants.

Factors which determine labor productivity

Some of the factors affecting the productivity of labour include the education or skills of the workforce, the availability of natural resources and technology, the amount of investment capital per employee and in some poor nations, the health of workers is also a vital determinant in the productivity of labour.

What happens to interest rates and investments when the credit taxes are increased?

An increase in credit taxes would harm economic growth. This is because taxing any activity will reduce the level of such an activity. Thus an increase in investment tax credit would lead to a reduction of investment and interest rates.

Evidence as to the success of unions in raising the wages of their members

Unions have been known to actively represent their members in collective bargaining and they are capable of fixing high prices for their members. Additionally, they also raise wages above the competitive levels.



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Are credit cards considered to be money? Explain

Credit cards are known to be essentially short term loans and they are considered to be money because any firm accepting credit cards are sure that they will get paid for purchases done by the holder. In conclusion, credit cards cannot be called money because an individual can default on payments.

Classical Dichotomy

Classical dichotomy in Macroeconomics refers to an idea that is attributed to pre-Keynesian and classical economics that nominal and real variables can be separately analyzed. An economy can be capable of exhibiting classical dichotomy if real variables like for instance real interest rates and output can be analyzed completely analyzed without considering what is occurring to their nominal counterparts, interest rate and the money value (Shaviro, 1999).

Meaning of Net Capital Outflow

Net Capital Outflow, also known as NCO refers to the Net flow of funds that is invested abroad by a nation during a specific time period most commonly in a year. Besides the balance of trade, NCO is also used in characterizing the nature of a nation’s economic and financial interaction with the entire world.

The supply of loanable funds and the equilibrium real interest rate on U.S Citizens

The interest rate will adjust in order to bring the demand and the supply for loanable funds into balance. A higher real interest rate will discourage domestic investment and the outflow of net capital to foreign nations.

What happens to amount of money held by households when price levels fall and the implication on investment and interest rates?

A fall in the price levels will result in a rise of the value of money that households want to hold. A fall in price levels will thus cause a rise in the purchasing power or value of money that is held. Thus, with the same amount of money held by households, it would be capable of buying more worth of services and goods than before as a result in fall of price levels.

What Phelps and Friedman predicted would happen if policymakers tried to move the economy along the Phillips curve

The relationship between the rate of unemployment and the rate of inflation is represented by the Phillips curve. Even though he had precursors, the study of unemployment and wage inflation by Phillips is a great milestone towards the development of macroeconomics. There would be a rapid increase in wages if policy makers attempted in moving the economy along the Phillips Curve. 


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