How does pork barrel spending hurt the economy?

July 7, 2024 No Comments

A: Pork barrel politics affect the economy in several ways. Pork barrel spending occurs when the government earmarks funds to be spent in a specific region of the country, usually as a favor to an elected representative from that region. Such government spending often confers

How does fiscal policy impact the budget deficit?

July 7, 2024 No Comments

A: Fiscal policy refers to any uses of the government budget to affect the economy. This includes government spending and levied taxes. Policy is said to be expansionary when spending increases or when taxes are lower. Conversely, policy is contractionary when spending decreases or taxes

How does price elasticity affect supply?

July 7, 2024 No Comments

A: There are two types of price elasticity: price elasticity of supply and price elasticity of demand. The price elasticity of supply measures the responsiveness to the supply of a good or service after a change in its market price. According to basic economic theory,

How Does GDP Affect the Standard of Living?

July 7, 2024 No Comments

A: Gross domestic product (GDP) measures the total output of an entire economy by adding up total consumption, investment, government expenditure and net exports. GDP is therefore considered a quality approximation of income for an entire economy in a given period. Per capita GDP is

How does globalization impact comparative advantage?

July 7, 2024 No Comments

A: Globalization has made the concept of comparative advantage more relevant than ever. Comparative advantage is defined as one country’s ability to produce a good or service more efficiently and inexpensively than another. Economist David Ricardo defined the theory of comparative advantage in the early

How does government policy impact microeconomics?

July 7, 2024 No Comments

A: A government policy has microeconomic effects whenever its implementation alters the inputs and incentives for individual economic decisions. These changes come in many forms, including tax policy, fiscal policy, regulations, tariffs, subsidies, legal tender laws, licensing and public-private partnerships (to name a few). These

How do you calculate GDP with the expenditures approach?

July 7, 2024 No Comments

A: To calculate gross domestic product (GDP) with the expenditures approach, add up the sums of all consumer spending, government spending, business investment spending and net exports. The resulting GDP figures, also known as aggregate demand, should represent the total amount of expenditure on final goods and

How do you calculate GDP with the Income Approach?

July 7, 2024 No Comments

A: The income approach to measuring gross domestic product (GDP) is based on the accounting reality that all expenditures in an economy should equal the total income generated by the production of all economic goods and services. It also assumes that there are four major

How do you make working capital adjustments in transfer pricing?

July 7, 2024 No Comments

A: Transfer pricing refers to prices that a multinational company or group charges a second party operating in a different tax jurisdiction for goods, services and intangibles. Transfer pricing attempts to assign one of the two parties, also known as the test party, with arm’s

How do you the calculate Sharpe ratio in Excel?

July 7, 2024 No Comments

A: The Sharpe ratio helps investors evaluate the relationship between risk and return for an asset. Since it was introduced by William Sharpe in the 1960s, the Sharpe ratio has become one of the most widely used metrics in finance and economics. By quantifying both

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