Running head ECON QUESTION .docx
- 1. Running head: ECON QUESTION 1 ECON QUESTIONS 5 Econ Questions Name Institution Econ Question Positive Vs Normative Economic Analysis Statements Economics as an academic discipline quite commonly uses idea from media analysts, business consultants as well as advisers on government policy. It is therefore very imperative for an individual to understand instances when economists make objective, evidence-based statements concerning the world works as well as when they are making value judgments on policies issues (Beggs). In this case, economist usually uses positive and normative economic in analysis statements. Positive economic statement can be defined as objective, descriptive and factual statement that can be tested amended or rejected by referring to the available evidenceand that dealwith objective explanation and the testing and rejection of theories. On the other hand, negative economic statement can be referred to as statements that are subjective, prescriptive and value- based statements rather than objective statements. Positive economic statement is therefore objective and fact based, while normative economic statement is subjective and value based. Positive economic statements do not have to be correct, but they
- 2. must be able to be tested and proved or disproved. Normative economic statements are opinion based, so they cannot be proved or disproved. Other things equal This is a common assumption that is used in economics which is used in identifying the relationship between two different variable; for instance, quantity and price in the law of demand. While doing this, the assumption is used to see how the relationship of the two different variables can be affected by other things. The difference between GNP Vs GDP: show and explain model used for economy. GDP refers to Gross Domestic Product and the total output measured by money of all final goods and services produced by an economy in a country in a given time period (usually one year) (Lidderdale, 2003). On the other hand, GNP refers to Gross National Product which measures the total market value of goods and services produced in a given period of time. GNP also encompasses the value of net income made abroad. Moreover, when calculating GNP, the value of what foreign countries earn in the given country is subtracted from the value. The model used in calculating GNP is Gross national income (GNI) = GDP + (income receipts from the rest of the world) – (income payments to the rest of the world) The four economic resources (explain in detail) and give terms used for the payment of each? The four economic sources include; Land, Labor, Capital, and entrepreneurship. Land is the natural resources such as iron
- 3. ore, gold, diamonds, oil, etc. while labor is human resources such as wage-earning workers. Labor is the effort that people contribute to the production of goods and services while 'Land' includes not only the site of production but natural resources above or below the soil (Federal Reserve Bank of St Louis). The income earned by labor resources is called wages which is the payment for labour. The payment/ income that resource owners earn in return for land resources is called rent. Capital on the other hand man made resources such as machines, plants and equipment used in the production of final goods, such as assembly lines, trucks, heavy duty machinery, factories, etc. Capital has interest as payment or reward. Entrepreneurship is the person or individual who wants to supply the product to the market to make profit. Entrepreneursusually invest their own capital in their businessin which its payment or reward is profit. Describe with diagrams free trade concept. Use immigration an outsourcing basis for discussion Free trade is a trade policy that aims at allowing and encouraging more two or more nations to carry on trade and business transactions with no or minimal government interference, tariffs or restrictions. According to Bhagwati (2002), free trade can in a nutshell be defined as a system of trade policy that permits people who are involved in trade (i.e. traders) to carry out their activities of buying and selling goods and services without any external hindrances or restrictions especially from the government. It is normally a common practice by most governments in many countries to get involved in the day to day activities (or operations) of most of the businessmen in that particular country. With free trade, immigration is made possible where citizens of any state could buy and sell goods and services with the citizens of any other state, without tariffs or import restrictions. It also mean that citizens of one state could travel or move to another state without permission, passport, or other restriction. Additionally when world countries specialize in the production of the goods
- 4. and services they are best suited in, then they will be in a position to take, the advantages of economies of scale at offer such goods at cheaper prices. This enhances countries outsourcing some of their services to countries where poods and services as well as capital is cheap. REFERENCE Bhagwati, J. N. (2001). Fair Trade and Harmonization: Economic analysis. Cambridge, MA: MIT Press Beggs, J. (n.d). Positive Versus Normative Analysis in Economics. Retrieved from http://economics.about.com/od/economics-basics/a/Positive- Versus-Normative-Analysis-In-Economics.htm Federal Reserve Bank of St Louis. (n.d)Factors of Production – The Economic Lowdown Podcast Series. Volume 1, Episode 2 (6:19).Retrieved from http://www.stlouisfed.org/education_resources/economic- lowdown-podcast-series/factors-of-production/ Hornberger, J. G. (n.d) . The Case for Unilateral Free Trade and Open Immigration. Retrieved from http://www.amatecon.com/etext/cftoi/cftoi-ch01.html Lidderdale, T. (2003). Introduction to Macroeconomics 4. Measuring Output of the Macroeconomy. Retrieved from www.lidderdale.com/econ/104/ch4Lect.html