Description
Purpose of Assignment
The purpose of this is assignment is for students to review the basic principles of economics and the concepts of the circular flow model, showing the connectivity of society's economic players and the flow of goods and money within an economy. Students will learn how society allocates its scarce resources and how economists are both scientists and policymakers. Students will define GDP and CPI and how they are calculated.
Assignment Steps
Resources: National Bureau of Economic Research; Principles of Macroeconomics: Ch. 1, 2, 3, 4, 5, 6, and 7
Scenario: Your organization's CEO is concerned that members of the strategic planning committee are not familiar with current economic thought and principles. The CEO has assigned you the task of developing a report to introduce some of these thoughts and principles.
Develop a 1,050-word report to the members of the strategic planning committee explaining the following information:
- How economists are both scientists and policymakers and what principles society uses to allocate its scarce resources.
- Using the circular flow model, explain the flow of money and goods in an economy.
- How the economy coordinates society's independent economic actors.
- A country's gross domestic product (GDP) and how it is defined and calculated.
- How the consumer price index (CPI) is constructed and why it is an imperfect measurement of the cost of living.
Format the assignment consistent with APA guidelines.
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Explanation & Answer
Attached.
Running Head: PRINCIPLES OF MICROECONOMICS
Principles of Microeconomics
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PRINCIPLES OF MICROECONOMICS
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How economists are both scientists and policymakers and what principles society uses to
allocate its scarce resources.
Economics refers to how the society, businesses, governments, individuals, and
households allocate scarce resources to meet the unlimited needs within the society. It is
imperative to understand that the concept of economics supports the circular flow of goods and
services through allocation. In essence, the society, businesses, and government among other
bodies will try to allocate resources based on the needs of the system and the people in general.
In allocating these resources, economics play a vital role. It is important to note also that
economists play a critical role within the context of societal economics by coming up with
appropriate models, hypothesis and economic variables that enable them to predict the behavior
of the economy (Mankiw, 2015). This helps in allocating resources efficiently and facilitates the
circular flow of resources within the economic system.
Economists are both scientists and policymakers because they develop both models and
come up with the appropriate hypothesis that can ease the prediction of the economy at a future
date. On the same note, economists are policymakers because they come up with appropriate
economic policies that enable government and the society to manage the economy more
effectively. In the contexts of economic forecasts, an economist can be said to be a scientist sinc...