Because households consume goods and services and provide factors of production, “this means that the other two domestic sectors - business and government - exist to satisfy the wants and needs of the household sector” (AmosWEB Encyclonomic WEBpedia, 2016). Leakages to the GDP occur when households purchase goods and services which are taxed by the Government, or when households consume goods that are imports where the profits are sent to other countries, and also money saved by households isn’t included in the GDP.
Business Sector includes firms who seek profits by producing goods and services. Businesses utilise factors of production and people provided by the household sector to produce goods and services that are sold in the market for which they receive revenue. They pay their workers wages, some of which is used to consume these goods and services. Businesses can have contracts with the Government, for example to build roads and hospitals.
The business sector interacts with the household sector by utilising factors of production and by paying incomes, some of which will be spent on the goods and services produced to satisfy household’s wants and needs. Businesses pay taxes to the Government and receive revenue from Government contracts. Injections are made to the GDP when businesses make capital investments which help boost production and promote economic growth, and when businesses sell products produced in New Zealand to other markets.
... middle of paper ...
...act on changes yearly, giving governments a more accurate measure of changes in production output over time.
c. Apart from measuring inflation, showing price changes over time and measuring the effectiveness of government economic policies, the CPI can be used to indicate changes in the purchasing power of money, to measure the overall price level and indirectly it could measure the standard of living because it shows the current prices and if people can afford to buy goods and services at that price that could indicate their standard of living (Samuelson & Nordhaus, 1992).
d. Real GDP is more meaningful than nominal GDP. The nominal value creates a false impression as it doesn’t allow for inflation. Although at present inflation is low, it nevertheless should be taken into account to ensure realistic monetary values, particularly when estimating future cash flows.
Need Writing Help?
Get feedback on grammar, clarity, concision and logic instantly.Check your paper »
- Question 1 – Mining Boom Due to increasing demand for natural resources such as coal and iron ore (Anthony, 2016) the mining sector of Australia boomed as it exported to countries such as China (Heath & Petrie, 2016). Thus, affecting the Australian Gross domestic product (GDP). GDP is “the market value of all final goods and services produced within a nation 's geographic borders during a period of time, usually a quarter or a year” (Layton, Robinson, & Tucker, 2016, p. 257) and helps to measure economic growth.... [tags: Inflation, Economics, Gross domestic product]
1889 words (5.4 pages)
- Background Brazil is one of the wealthiest countries in the world with a Gross Domestic Product (GDP) of $2.253 trillion. In 2014, Brazil will host the World Cup and, again in 2016, it will host the Olympic Games. Hosting these two events will surely lead to large investments inside the country. With resilient banking system, low inflation rate and strong domestic markets, Brazil’s economic growth is stable. However, Brazil also experiences from income inequality and social factors differences such as education, health and livelihoods.... [tags: Government, Economy, Development]
2538 words (7.3 pages)
- Causes which affecting inflation rate in Australia - There are two types of cause which are affecting inflation rate of Australia . First is demand pull inflation and second cost push inflation. • The cause of demand inflation can be demand side conditions- Demand side conditions sometimes can be very strong which can affect the economy . In a cyclical way inflation goes up and down . such as profits increase in disposal, increases in administration spending and movement of economy. if any change happens in these aspects then it can cause of demand inflation.... [tags: Inflation, Monetary policy, Supply and demand]
1396 words (4 pages)
- Introduction Yahoo was incorporated in 1995; its business activity was mainly based on online advertising, promotions, direct marketing, sponsorships and merchandising (Terry, 2006). However, overtime, Yahoo has fallen behind its competitors who generate more revenue than itself due to changes that occurred within its organizational structure. For instance, the complexity in its organizational structure and poor decision making processes. Due to such factors Google who is Yahoo’s foremost competitor, raises twice as much revenue due to better decision making and flexible organizational structures.... [tags: economy, competition, technology]
771 words (2.2 pages)
- Contents Summary 3 Situation analysis 3 Research on portfolio theory 4 Variables explaining stockholding 5 Factors for trying to explain the phenomenon 7 Conclusion 11 References 12 Summary At the very basis of this paper is the analysis of the limited household stock market participation phenomenon. The relevance of the issue is discussed through the perspective of the theories of finance with special regard to the Model Portfolio Theory. Given the point of view of one of the largest stock markets - the market of the United States of America - the phenomenon is first of all presented as deriving from behaviours related to stockholding.... [tags: Limited Household Participation Phenomenon ]
2832 words (8.1 pages)
- Both Egypt and Liberia have been struggling to improve their security sector reform. In Egypt they have been facing a revolution since 2011. It started when President Hosni Mubarak's security and police were harsh and merciless toward the people and because of his security divisions that weren’t doing their jobs correctly. Liberia revolution on the other hand is being lead by Charles Taylor who is head of Liberia and who was kind of their unelected president at the time but is now elected as their current president.... [tags: Security Sector Reform]
1089 words (3.1 pages)
- Abstract This paper studies the details behind errors and accidents taking place in aviation maintenance. It states the human factors and how most of the misfortunes in the aviation industry happen because of them. The Federal Aviation Administration created a chapter on the 8083-30 General Book regarding this topic. The chapter discusses the twelve components of the “Dirty Dozen”. Any one of the dozen can result to an injury, or death, of a person on or off the flight. Considering the human factors in maintenance is absolutely necessary to improve safety and reliability and prevent injury and death.... [tags: Air safety, Aircraft]
2472 words (7.1 pages)
- Of the vertebrates, birds of the class Aves are the most noticeable, the most melodious and the most beautiful. Birds with more than nine thousand species far put number other vertebrate groups except fishes” . (Hickman P.C Jr , et.al pg 582). Birds are the only vertebrates that have feathers and forelimbs modified for flight although many species do not use their wing for flight. Birds can be found all over the world including Guyana. There are many factors affecting birds in Guyana. Deforestation is one of the factors affecting birds on Guyana.... [tags: ecology, enviroment]
893 words (2.6 pages)
- The Factors Affecting British Voting Turnout Turnout is declining, in 2001 the turnout was 75% yet in 2005, a mere 4 years later, the turnout had decreased to %9.4% a huge drop. This could be due to many reasons; one of these reasons could be the rise of apathy in politics in the UK. Voters may be satisfied by the government & the economy & may think that the existing government shall win the election yet again so may not come out to vote, it could also be the other way around, voters may think that the government is so appalling that its defeat is inevitable & voters foresee a new government coming into power.... [tags: Free Essays]
397 words (1.1 pages)
- External Factors Affecting a Business INTRODUCTION EXTERNAL FACTORS AFFECTING THE COMPANY'S BUSINESS AND PROSPECTS There are many factors that affect the Company's business and the results of its operations, some of which are beyond the control of the Company. The following is a description of some of the important factors that may cause the actual results of the Company's operations in future periods to differ materially from those currently expected or desired. OBJECTIVE The objective of this paper is to introduce the external factors affecting the jeans industry from a business view.... [tags: GCSE Business Marketing Coursework]
520 words (1.5 pages)