GDP and the circular flow of income and expenditures Research Paper

GDP and the circular flow of income and expenditures - Research Paper Exampleroductivity, expenditure, or income (gross domestic harvest-home of a nation) (Ouanes, Abdessatar, Subhash, Thakur, Lienert, Marciniak and Swiderski, 1997, p.87).Consumption is a primary concept in economics, and many other social sciences also study it. Economists ar very much interested in the relationship that exists between income and consumption. According to well-nigh economists, consumption entails the final purchase of goods and function by individuals. Other economists define consumption in a much broader manner. They define it as the aggregate of all economic activities that does not include the design, marketing of goods and services and production. An example is the adoption, selection, physical exercise, disposal and the recycling of the services and products (Ouanes, Abdessatar, Subhash,Thakur, Lienert, Marciniak and Swiderski, 1997, p.87)According to economists, Investment is the accumul ation of physical entities that are freshly produced, such as goods inventories, houses, machinery, and factories. Also in macroeconomics, it is the amount purchased per unit time of goods that are not utilise but are employed in at a future date production. It is as a function of interest rates and income. An increase in the amount of revenue will contribute to high coronation and, on the other hand, higher rates of interest may lead to the discouragement of investment since it will be more costly to borrow money. More so if a company decides to use its coin in an investment. The interest rate will represent an opportunity cost of investing the funds rather lending out the money for interest (Ouanes, Abdessatar, Subhash ,Thakur, Lienert, Marciniak and Swiderski, 1997, p.87)According to economists, government spending entails all consumptions of the government, investments, and get rid of payments. Government spending can be by taxes, seigniorage, and government borrowing. Cha nges in the government expenditure are a primary component of fiscal policy which is used to stabilize the