Question

TRUE OR FALSE/ MULTIPLE CHOICE and word response questions.

C. a more permanent government involvement in the banking system, even creating a pational banking system that owns and operates most of the global and regional banks. Deshort-term increases in government spending to stimulate the economy. 20. When describing the state of the U.S. economy, reporters often refer to the nation's GDP, its unemployment rate, and the CPI. Explain what each of these terms means and why each measure is significant. 21. Explain the difference between fiscal policy and monetary policy. Discuss how each of these approaches can be used to influence the state of the economy and who utilizes these policies. 22. "Actions speak louder than words!" is an old saying that refers to the fact that people's actions-how they act as opposed to what they say-are often testament to their true ethical values. 23. The corporation is the most common form of business ownership. 24. The three major forms of business ownership in the U.S. are sole proprietorships, partnerships, and corporations. 25. The first step in starting a sole proprietorship is to fill out a proprietorship charter application form and file it with the state government. 26. The profits of a sole proprietorship are taxed as the personal income of the owner. 27. Most states have legal restrictions that prevent individuals from incorporating. 28. Delaware is a popular state in which to seek incorporation due to its reduced costs and other perks. 29. To change ownership in a corporation you simply sell your stock to someone else. 30. One advantage of an Corporation is that the profits are distributed to the owners and taxed as each owner's personal income, thus avoiding the problem of double taxation

Answer 1

Note: As per the answering guidelines, only the first question has been answered.

Solution- 20

Gross domestic product (GDP)

GDP is the most important and widely followed economic indicator in all of economics. It is the most commonly used substitute to indicate the economic activity in an economy.

In simple words, it refers to the economic value (i.e. market value) of all the final goods produced and services provided in an economy during a given period of time.

In other words, GDP is the income earned through goods and services produced within the geographic boundaries of a country.

Importance:

While the dollar amount of a country's GDP indicates the absolute level of economic activity in a country, the growth rate of real GDP is even most important and shows the economic progress of a country.

It is used by investors, analysts, government, planning commissions, financial institutions and almost everyone else who are interested in any way, shape or form in the economic progress of a country.

Unemployment rate:

One of the most commonly followed indicators of economic progress and prosperity of a country, unemployment rate refers to the % of total available workforce that doesn't have jobs. In other words, it measures the share of those people in total workforce who are willing and available to work but don't have jobs.

Lower the unemployment rate, more prosperous is the economy and vice-versa.

Importance:

On a standalone basis, the unemployment rate is an indicator of economic growth. Reducing unemployment indicates growth and vice-versa.

Further, the modern economies are built on trickle down theories such that growth in capital must trickle down to growth of other factors of production and must grow the economy as a whole. Therefore, it's crucial to see the GDP growth alongwith indicators such as unemployment rate which helps in understanding the impact of GDP growth on the economy as a whole.

It is also continuously used by government, planning commissions to adapt their economic policies as per the changing requirements in an economy

Consumer Price Index (CPI):-

The CPI is an index (a statistical measure) which is calculated to keep a track of the changing price levels of consumer goods in an economy. It is an index which is calculated using the prices of a basket of goods & services and helps gauge the inflation levels in an economy.

For e.g- CPI today can be compared with the CPI of one year back to calculate the inflation in the last 12 months in consumer goods and services.

Importance:-

Used worldwide as a measure of inflation, CPI becomes a primary go to source for central banks to determine the monetary policies, governments to determine the fiscal policies, investors to gauge the economic conditions, and the general public to track the existing inflationary pressures.

Therefore, its importance comes from its ability bas a measure of inflation.