Economy Essay Example | Topics and Well Written Essays - 500 words - 1

Economy - Essay Example tanding of how the economy is utilizing scarce resources, economists delve into classifications of GDP and its effects on the several forms of spending occurring in the country. The GDP is divided into four main components. These include consumption, investment, government purchases and net exports. All these components when added together equal the GDP. The relationship between GDP and its four components can be expressed in the form of an equation as follows: This equation represents an identity (Mankiw 208). This means that the variables of the equation are going to decide on the validity of the equation. In the equation, all sorts of expenditure that is done in the country are classified into either of the components of the GDP. The largest part of the GDP is consumption purchases and constituted 70% of the GDP in the US in 2007 (Mankiw 211). They entail the expenditure of the household on consumer goods and services in a particular period. Consumption purchases entail a flow concept (Gwartney et al. 153). The services and goods that the consumers opt for are mostly nondurable in nature. Expenditures done on food, clothing, entertainment and medical services are part of consumption purchases. These products are not very long-lasting and are used up in a short span of time. On the other hand, durable products such as cars form only one-ninth of the total consumption purchases and are used up over a long period of time. Investment entails the production of capital goods that are going to cause a flow of future services. They are not consumed over a short period of time and include the investments of companies into machineries and equipments as well as houses. Gross private investment can be carried out for the purpose of replacing old machinery or for adding net additions to the existing pool of capital assets (Gwartney et al. 153). Net investment is crucial in knowing the future scope of productivity of the economy. In 2007, they equaled to 15% of the GDP in

Econimics course work Coursework Example | Topics and Well Written Essays - 1000 words

Econimics course work - Coursework Example This puts high power incentives as a risky means of having things done in an organization. If the management system is not strong and if means of monitoring and evaluation is not keen, then employees could use dubious means to have their goals realized. This could put an organization in the edge of losing its face and reputation. Applying high power incentives also has a tendency of narrowing the capacity of employees (Campbell, 76). They would largely concentrate on one endeavor wherein there is a promise; while at the same time neglecting other areas that may not be of great urgency but of equal priority. This may also lead to an extensive malfunction of other departmental organizations and functionalities. These make high power incentives not appropriate for motivating employees. Various tasks are best performed by contract. These include such tasks that need external audit that internal employees should not do. Also tasks that require expertise attention that may not be found wit hin the organization warrants a contract. Tasks, which may expose the secrets of the organization, are good if they are contracted unless under examined ethical conditions. Internal employees best do such tasks. 2. Issues related to the organization of the firm (Contract between Asphalt Acres and Auto Engineering Company) The main purpose of a contract is formalizing an agreement between parties. The agreement has to be mutually agreed upon and legally consented to. Contract often encompasses a wider range of things; in this case, the use of a property, pricing of items and facility, open knowledge of any due charges. The contract relationship, terms of dispute settlement, and terms and conditions underlying work for hire have to be made clear. Since the pricing of the property and any other charges underlying the contract has to be made by Asphalt Acres, it would be proper for the Auto Engineering Company ensure that they evaluate these terms if they are commensurate to the profita bility of the whole project. It is also important to determine the cost of other options available lest they run the risk of being exploited. All issues in a contract have to be made clear, all the hidden chares may interfere with the relationship of the contract, and therefore the Auto Engineering Company should not accept any vagueness related to the issues of the contract. All charges have to be made clear to avoid any conflict. Additionally, to avoid any conflict of interest, the relationship, and the management of the field has to be made clear. The offer has to be of value and of great benefit to both parties. They also have to determine their terms of management and clearly determine the roles of each company in the field to avoid any confusion that may arise. 4. Transfer Prices Transfer of pricing refers to the analysis, charge adjustment, and price setting made between Parties of related interest trading on goods and services. Price transfer is an important determinant of h ow the prices and interests are accrued between the parties. The transfer of pricing also determines the rate of taxes. Allocation of resources is also determined by the determined by the existing prices among the components. Price transfer is important for the tax administrators and taxpayers due to their importance in determining the income, expenses,