National Income Determination Term Paper Example | Topics and Well Written Essays - 1500 words

National Income Determination - Term Paper Example Two common measures of income are GNP (gross national product) and GDP (gross domestic product). GDP measures the total value of output (goods and services) produced by the factors of production located within the country's boundary in a year. The factors production may be owned by any one - citizens or foreigners. GNP is the total value of output (goods and services) produced and income received in a year by domestic residents of a country. It includes profits earned from capital invested abroad. While taking them both together we get, Economically speaking when the demand for commodity goes up; the production increases. Income leads to expenditure which again leads to production. Thus production, income and expenditure are mutually related; economic activities are related to these 3 stage. Based on this 3 methods are used to calculate national income National income's measurement is necessary for a country due to various purposes; it helps in projection of future course of economy, estimates economic development and how far have they been achieved, helps government to design suitable development policies, helps firms in forecasting the future demand of their product, tells the contribution of various sectors to national income and facilitates international comparison. Various problems rise while measuring national income. ... For e.g. we can not add kilograms of wheat, to meters of cloth, to tones of coal in physical terms. (G.F. Stanlake, 1995). Thus the only common measure is money. Secondly when goods and services have no market price values difficulties are encountered like in public services such as defense, law and order, education and health services. The solution adopted is to measure their values at cost. Then there are problems with the goods and services which people provide for themselves like farmers consume some of their own output or much of repair and improvement work is done by 'do it yourself' basis. Rough estimates are used in these cases in measuring national income. Double counting is yet other problem as the output of one firm are the inputs of other firm; two ways to tackle this is either by adding value of final product or totaling the values added at every stage of production. National output is measured at times in terms of factor cost, using market prices could be misleading thi s is another problem associated with measurement of national income. Measuring national income Three different methods are used based on different views of national income. Firstly the production method in which national income is viewed as the total output from domestically owned resources during the course of year. This is the most direct method where the output figures of all the firms in the country are taken. Exports are included but imported materials and services are excluded (this is automatically done as values added in the country are taken). This will give us GDP and to it add NPIA. Income method the second approach is viewed in terms of incomes earned by factors of production engaged in producing the national output. As the total product is valued at factor cost,

New Economy and the Service Sector Term Paper Example | Topics and Well Written Essays - 1250 words

New Economy and the Service Sector - Term Paper Example The present paper has identified that countries that fundamentally rely on the service-based economy have advanced economies than those whose economy is not service-based. Nevertheless, the new economy has had an enormous effect on the service sector. In effect, while considering the new economy, this expose is an investigation of the changing scenario in the service sector. In addition, the expose will elucidate on the cardinal principles of service quality. Furthermore, there will be an analysis on how the management of quality can create a much better service offering in organization. New Economy and the Service Sector According to Henwood, the New Economy has its origin between 1996 and 2003. In this regard, Henwood that the finance sector led politicians, businesspersons, economists, journalists, and people to believe that there was an economic change resulting from positive benefits experienced in an extended period. In this case, the developments included advancements in techn ological development, a more focus on work, and enormous global expansions of corporate. In addition, these developments would also include the productivity impact of the technological advancements with an added effect on quality of life (Henwood). Globalization of business and the revolution of the information technology field are the major features of the New Economy (Shepard). In this regard, the New Economy marked the introduction of free trade, market forces, and widespread deregulation in most countries of the world. These countries included former communist countries that disregarded free markets and market forces in their economies. In addition, globalization has led to economic unions growing and becoming more powerful as evidenced by the European Union (EU) and North America's free-trade agreement (Shepard). Nevertheless, the advancements in information technology have led to this revolution. Advancements in technology have become part of our daily lives. From the internet to the faxing machine, cellular phones to computers, these tools have become more than a necessity in human beings life. In this regard, this has led to the digital era in which opening and creation of new industries has become the norm. In this regard, the New Economy emphasizes the need for integrating information technology in businesses in the service sector. As a result, rapid technological changes enhance the capability of businesses in the service sector to get rid of layers of management (Shepard). Consequently, using this technology in the service industries enhances restructuring of industries in the service sector. In effect, this restructuring is crucial to bring efficiency to the service sector due to integration of information technology, which is a feature of the New Economy. Hartley noted that workers in the New Economy engaged in â€Å"knowledge-intensive work and use new information and communication technology to connect to customers and clients around the globe † (qt. in Pupo and Thomas). In effect, this has ensured that the workplace in the service sector has become more flexible. Consequently, flexibility is crucial towards the creation of an enabling environment for enhancing capacity building for more productivity and elimination of hierarchy in the service sector that defined the wages on labor.