Project Paper Macroeconomics

1161 WordsFeb 5, 20115 Pages
Project Paper 1. What is the gross domestic product? Gross Domestic Product, or GDP, is the total market value of final goods and services produced within an economy in a given year. It is the most common measure of an economy’s total output. 2. When prices change, how do we measure real income? When prices change we measure real income with 3. What is unemployment? Why can’t it be driven down to zero? Unemployment is when you don’t have a job. Unemployed people are those who don’t have a job but are actively looking for work. Unemployment cannot be driven down to zero because the lower the unemployment rate is, the harder it will be for businesses to hire new employees. The harder it is to find qualified employees, the more…show more content…
But, if interest rates on loans are low, they would be more likely to borrow money. Banks have to offer decent rate for deposits in order to attract borrowers for loans, but at the same time be able to balance those rates. 14. Why would most investments in the economy fail to take place if there were no financial institutions? Most people don’t have large amounts of money to invest in something. Today, if you want to buy a house, a business, a car, or even go to college, you usually get a loan because you don’t have enough cash on hand to pay for it. If we didn’t have financial institutions it would be very difficult for some people to have these things, or it would take a very long time to save enough to buy it. 15. Why do all societies have some form of money? Money is thought to encourage trade and the division of labor, in turn increasing productivity and wealth. The absence of money causes an economy to be inefficient because it requires a coincidence of wants between traders. The likelihood that you will find someone to trade with you is very small. 16. Why is the chairman of the Federal Reserve one of the most powerful people in the country? The chairman of the Federal Reserve is one of the most powerful people in the country because he is in control of the Board of Governors of the Federal Reserve. They govern or control the Federal Reserve System. 17. There are several attributes that would attract
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