Read Module 2 Lesson 4 File and answer the following questions.
You can
typewrite your answer and attach a file or you can handwrite your answers, take a
photo and attach the file.
1. Explain (in your own words) why the assessment of economic environments
is often more conditional than universal because of the following factors:
a. System complexity
-Identifying suitable indicators is hard.
b. Market Dynamism
-New economic situations.
c. Market Interdependence
- Markets influence each other.
d. Data Overload
- Complex decision-making.
2. What is Economic Freedom? Explain Economic Freedom Index
-Economic freedom is the “absolute right of property ownership, fully realized
freedoms of movement for labor, capital, and goods, and an absolute absence of
coercion or constraint of economic liberty beyond the extent necessary for
citizens to protect and maintain liberty itself.”
3. Explain and give an example for the following types of economic systems:
a. Market- A market economy is an economic system whereby individuals,
rather than the government, make most decisions. It is anchored in the
doctrine of capitalism and the principle that private ownership confers
inalienable property rights that legitimize the profits earned by one’s
initiative, investment, and risk. For example,,
b. Mixed-a system in which economic decisions are principally market
driven and ownership is largely private, but the government intervenes,
from a little to a lot, in allocating resources. The mixed economy
integrates elements of the command and market systems.
c. Command economies-government owns and controls resources, taking
on the authority to decide what products to make, in what quantity, at
what price, and in what way. For example, in a market economy, if the
government wants computers, it collects taxes and buys computers at
market prices from privately held companies.
4. Explain what is a gross national income
- It measures the value of all production in the domestic economy together with
the income that the country receives from other countries (mainly interest and
dividends), less similar payments it has made to other countries.
5. What is a gross national product?
- It is the value of all final goods and services produced within a nation in a
given year, plus the income earned by its citizens abroad, minus the income
earned by foreigners from domestic production.
6. Explain what is a gross domestic product
-It estimates the flow of economic activity within a country, not simply its stock
of productive assets. It also assesses economic environments in which the
output of the multinational sector is a significant share of total activity.
7. What is the difference between a gross national income, a gross national
product and a gross domestic product? Explain by providing an example for
each.
-The GNI per capita is a measure of the average living standards of a country. For
example, Gross Domestic Product measures the value of what is produced in the
country. For example, A good is a video game,
Gross National Product measures how much of that value stays in the country. For
example, anufacturing of tangible goods such as vehicles,
8. Explain purchasing power parity
- It determines how much money is needed to purchase the same goods and
services in two countries and using that information to calculate an implicit
foreign exchange rate that reflects the same purchasing power, per unit of
currency, in the different countries.
9. Explain how managers can improve analysis by estimating an economy’s
sustainability?
-Measuring the monetary quantity of market activity through GNI, GNP, and
GDP without accounting for the associated social and ecological costs that
result from the activity that generated economic growth—misrepresents
performance and misinterprets potential. Instead, sustainable development
proponents encourage interpreting economic activity in terms of its capacity to
“meet the needs of the present without compromising the ability of future
generations to meet their own needs.” As such, it endorses a broader accounting
of the gains and costs of growth to better gauge an economy.
10.Explain how managers can improve analysis by estimating an economy’s
stability?
- the emerging science of Happynomics reports that nearly 70 percent of
personal satisfaction is determined by the quantity and quality of relationships,
not by economic output or wealth creation. Consequently, some contend that
GNI and its offshoots are at best misleading, and at worst, flawed (as some
point out, the expense of war boosts the economic growth rate). Rethinking the
goal of economic activity in terms of happiness, the argument goes, better
represents performance and potential. Happynomics calls for moving “from the
concept of financial prosperity to the idea of emotional prosperity.” Defining
happiness, like beauty, is often in the eye of the beholder. Potential indicators,
such as love, friendship, family relations, and actualization, are tough to pin
down.
