The Ten Principles Of Economics And The Data Of Macroeconomics (Term Paper Sample)

Ten Principles of Economics and the Data of Macroeconomics Name Institution Date Introduction Macroeconomics is an economics concept that equips people with the relevant information on how the economy of a nation works thereby allowing for the best manner of determining the most appropriate choices to make so that the country ensures an overall improvement in its wellbeing. Ideally, it serves crucial for the organizations, enterprises, and individual entities have to consider the impact of this concept on their prosperity (Sargent, 2015). Measuring the economic activities of a given system makes it easy to test various operational policies and ideas hence facilitating the macroeconomic performance. How economists are both scientists and policymakers and what principles society uses to allocate its scarce resources Economists are scientists since they come up with hypotheses and models, which one would be capable of testing using the available data obtained from various sources. These people derive their principles from empirical research. The models developed help in establishing predictions some of which might not be right on the mark. However, the data enhances the description of the actual undertakings of different people. On the other hand, economists are policy makers as they give recommendations on the procedures or operations, which a firm, an organization or a system in entirety ought to undertake. As such, they play a critical role in the identification of influential and non-influential figures when making the policy changes within the public sector as well as the private markets. In their policy-making process, the economists enable individuals to view the world in different and unique ways (Sargent, 2015). Considerately, everything that serves vital seems to be scarce. Resources are not exceptional in any way whatsoever. The society uses to market and command systems to help in the allocation and distribution of its scarce commodities and resources to a given population. In the market, the process depends on the use of price as a significant determinant of allocating the goods. However, the command system implies that the political spectrum would contribute significantly to their choices and decisions. Using the circular flow model, explain the flow of money and goods in an economy A circular flow model is an economic diagram, which acts as a representation of the monetary transactions within an economy. It involves the households and firms with two critical operations that include the flow of goods and services as well as money that would serve crucial in the payment process. These flows help in determining the expenditure value, income, and output. When the levels of these three values do not change, it shows that the system is at an equilibrium state. In this manner, it would mean that income (Y) equals to expenditure (E), which is equal to the output (O). When households spend on purchasing the commodities, the sellers or firms receive their incomes (Sargent, 2015). However, the process continues as the firms buy the production factors like labor, capital, land, and entrepreneurship. When this happens, the owners of the factors receive income in return. Consequently, these people buy the goods during which they spend their incomes hence bringing about a circular flow of money and commodities. How the economy coordinates society's independent economic actors An independent economic actor within a society can be an individual (household), or an organization (firm) that comes up with rational decisions aimed at self-interest maximization due to the ability to utilize the production factors like labor, capital, and land. Within an economy, these two actors (the firms and households) interact independently as the external factors do not come to cause any influence. However, the economy would coordinate their interactions through the market forces. These include the considerations that have an impact on the nature of demand and availability of commodities as well as their prices (Sargent, 2015). In an economic platform, the customers might have some unmet needs hence requiring the incorporation of most adequate opportunities and techniques. Moreover, the competitors in a given market determine the ability to supply some products hence showing how the economy operates with the actors. A country's gross domestic product (GDP) and how it is defined and calculated Gross Domestic Product (GDP) is one of the vital indicators that help in gauging the ...