Question

What are the two most basic types of information that economists use to measure the size of the economy? Describe them and how they are used.

Briefly describe “structural unemployment”?

What are the four phases of the budget cycle and what do they entail?

Describe the dominant political considerations involved in the preparation phase of public budgets.?

Answer 1

1. Different methods can be used for measuring economic growth, such as the Gross National Product (GNP) and the Gross Domestic Product (GDP).
Gross Domestic Product estimates the cost of a nation's goods and services.
Gross National Product measures the value of a nation-produced goods and services (GDP) and foreign investment income.
Some economists argue that total expenditure is a result of productive output.
While GDP is widely used, it does not alone indicate an economy's health.

The gross domestic product is the logical extension of monetary spending calculating economic growth. For example, if a statistician wants to understand the steel industry's productive output, he only needs to track the dollar value of all the steel entering the market over a specific period of time. Combine all industries ' outputs, measured in terms of dollars spent or invested, and you get total output. That was the theory at least. Unfortunately, relative productivity is not actually measured by the tautology that spends equal to sold-production.

Those of a certain age can recall learning as an economic indicator about the gross national product (GNP). Economists primarily use GNP to learn about the total income of citizens of a country over a given period and how people use their money. GNP tracks over a given amount of time the total income that the population earns. Unlike gross domestic product, it does not consider income accruing to non-residents within the territory of that country; like GDP, it is only a measure of productivity and is not intended to be used as a measure of a country's welfare or happiness.

2. Structural unemployment refers to a discrepancy between the available jobs and the unemployed's skill levels. It is caused by factors other than the business cycle, as opposed to cyclical unemployment. It happens when an underlying economic shift makes finding jobs difficult for some groups. It's more difficult to correct than other forms of unemployment. Even after a recession is over, structural unemployment may hold the unemployment rate high. This generates a higher natural unemployment rate if it is overlooked by policymakers.

3. Prepare Your Budget- Building it is the first step of the budget process. Done right, this process begins at ground level with careful thought. How much income is needed and what new initiatives should be taken into consideration.
As the small business owner, what is included and what is omitted from the budget will be driven by your leadership and vision. You must include expected revenues; expenditures for salaries, services and supplies for employees; and costs for any changes that you plan to make to your business.

Get Your Budget Approved- While the process of political budgeting is a bit messy, one of its underlying principles for your business is very meaningful. Budgets on a yes or no basis are not accepted. Rather, they are the subject of discussion. While the political process can sometimes distort budget priorities, it is not necessary for businesses to fall prey to the problem. Instead, the approval process can provide you with an opportunity to step back and take another look at how your company spends its funds. Many small business owners themselves manage all four phases of the process of their budget. That's all right, but don't in a vacuum. Look at it before you stamp it "verified" with your accountant or a trusted peer.

Execute Your Budget- It's time to implement it once a budget is approved. Business owners like you, unlike the federal government, can not enforce funds to stop wasteful spending. But your business tactics can be adjusted to handle spending increases or lower than expected revenues. Most of the time money is coming in and going out according to the budget. A good budget is not a constraint on what the business will invest. It is an economic embodiment of the strategy and tactics of your business for the year.

Evaluate Your Budget Regularly- Even the best prepared budget should be updated and, if necessary, revised from time to time. Changes in sales, expense changes and new customer base data are examples of things that may involve revisions to the budget. The government audits and evaluates the expenditure to ensure that money is spent legally. Yet ongoing assessment of the budget of your business requires a broader scope. You're going to want to keep an eye on how money is being spent effectively. But in industry, what really matters is whether you are running at a profit.

4. Generally speaking, a government budget is a document specifying the services, priorities and targets to be accomplished over a period of time and the monetary value of the projected revenue and expense to be incurred at a determinable future time. When approved by the legislature, a government budget becomes a legal document. At the federal level, the budget has an impact on fiscal, social, administrative and economic policies and their collective economic impact. First, the reformist posits that, as opposed to politics, budget decisions should be based on efficiency. Political considerations also affect the actions and decisions of politicians and lobbyists. These may not be logical and less successful. As such, the bureaucracy (public officials and technocrats) and politicians (including political appointees) are continuously in conflict. Budgetary decisions on incrementality are made on the basis of negotiation and consensus among stakeholders. There are minor adjustments to current policies and practices.

The budgetary system is the subject of fiscal policy. Government branches are battling for budgetary power control to affect the desired outcomes and political benefits system. Policymaking is the fifth view of budgeting policy. The budget's role is discussed for policy development and advocacy purposes. Policy discussions are conducted between opposing parties in order to resolve disagreements during budget deliberations.