Matthew_McCoy_Week_4_Chapter_24_Assignment - Matthew McCoy...

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ECON201 Week 4 Chapter 24 Assignment July 1, 2011 Professor John Volpe 1. In what ways are national-income statistics useful? National income accounting measure’s the economy’s overall performance. It does for the economy as a whole what private accounting does for the individual firm or for the individual household (McConnell, Brue, & Flynn, 2011, p. 486). These statistics generally give us an idea of the nation’s economy and debt situation. A business firm measures its flows of income and expenditures regularly – usually every 3 months or once a year. With that information in hand, the firm can gauge its economic health. All this information helps the firm’s managers plot their future strategy (McConnell, Brue, & Flynn, 2011, p. 486). National income accounting operates in much the same way for the economy as a whole. This accounting enables economists and policymakers to: Assess the health of the economy by comparing levels of production at regular intervals. Track the long-run course of the economy to see whether it has grown, been consistant, or declined. Formulate policies that will safeguard and improve the economy’s health 2. Why do national-income accountants compare the market value of the total outputs in various years rather than actual physical volumes of production? What problem is posed by any
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This note was uploaded on 09/24/2011 for the course ECON 202 taught by Professor Unknown during the Spring '08 term at Mountain State.

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Matthew_McCoy_Week_4_Chapter_24_Assignment - Matthew McCoy...

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