Macroeconomics (Coursework Sample)

Macroeconomics
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Macroeconomics
Gross Domestic Product (GDP) per capita usually helps in measuring the monetary value of the final products as well as services produced in the country in a given year through using the factors of production (Tucker 2011). It usually determines the level of economic growth in the country for proper comparison with other countries. However, it is usually not a good measure of the standard of living of a country. First, when it comes to price level, GDP per capita fails to become a good measure of the standard of living. This is because there is no attention given to the price level. For instance, GDP of a country could be high implying that the GDP per capita is also high. Nevertheless, is such cases, the cost of living is also high which in turn leads to low standard of living. On the other hand, a country a country can have a low GDP per capita with a high standard of living (Tucker 2011). This is possible when the price level is low.
Again, GDP per capita does not does not usually account for those people who are unemployed. This implies that the GDP per capita in this situation over overstate the standard of living in a country. This is because if there is full employment, there would be lower GDP per capita (Hall, & Lieberman 2013). This means that accounting for unemployment is vital for the purpose of measuring the standards of living of a country.
With regards to the Kenya which is a developing country, it will take the next 39 year from 2012 in order for the standard of living to double. This is through taking into consideration the GDP per capita in year 2012, which is 942.5 US dollars and the annual growth rate of 1.8. With regards to the United States, which is a developed country, when all factors held constants, it would take about 34 years for the standard of living to double. This is through taking the GDP per capita of 51748 .56 dollars with the annual growth rate of 2.02 percent. Taking both the US and Kenya into account, there has been cases of convergence and divergence in the standards of living of people over the last few years. For instance, there has been convergence in year 2008, 2009, 2010, and 2012. There has also been divergence in the standards of living between the two countries in year 2012.
Scotland Independence
In the course of this year, Scotland is going to vote whether to leave the United Kingdom or stay in the Union. This move is raising a lot of debates of whether it is going to keep using the Steering pound or not. The issue of currency has become of significance importance as it will determine the commercial interaction between UK and the rest of European Union. This is in case Scotland will split from the UK after the election (Broun 2007). Taking this into consideration, there are both cons as well as pros of currency union between Scotland and the United Kingdom, if Scotland will become independent.
When it comes to the advantages of currency union, it is true that if the Scotland will use the Steering pound as its currency, there will be enhancement of commercial transactions between the country and the rest of EU (Britain & MacGregor 2013). Common currency makes trade easier from due to a common platform of trading. First, the transaction costs will get eliminated. This implies that the two countries will not incur the costs of selling foreign currency. This will significantly increase the profitability of all firms in the EU.
Price transparency is another key advantage that will be there if Scotland will continue using the pound. Due to the distorting effects of exchange rates of currency, firms as well as household usually face a lot of challenges when it comes the prices of goods across many countries. Taking this into consideration, use of the steering pound by the Scotland after independence will solve this problem by creating price transparency throughout the EU region (Britain & MacGregor 2013). The uncertainty due to the fluctuations rates of...