During the short run, war stimulates the economy through the massive creation of jobs opportunities and production of weaponry. High government purchases during wartime generate some helpful economic gains mainly due to spending booms, thus facilitating the massive production of goods. For instance, during World War 2, the GDP of USA grew by almost 20%. The government needs to equip its military with helpful ammunition and gear. Private sectors win contracts to supply vehicles, bombs, boots, and costumes to the soldiers. The government purchases during wartime positively boost the economy. In the USA especially in the first and second world wars, government spending enhanced the development of new technologies, the generation of new industries, sources of employment and demand. For illustration, there was a notable advancement in airplane technology during the First World War.
Question 2
In economic life, the government will face a tradeoff while solving inflation and unemployment. For illustration, if the government aspires to raise the demand through the implementation of an expansionary economic program, the results will be an increase in GDP, and lower rates of unemployment but at the expense of higher inflation. I believe that obstinate inflation is more a change to durable economic progression than unemployment. For example, inflation impacts on costs of living, doing business as well as federal and corporate bond yields; this makes economic recovery a problem. In contrast, the government can easily curb the challenge of unemployment by raising taxes on the employed to compensate for the loss of revenue.
Question 3
There is a sharp contrast between economic and accounting profits. To illustrate, accounting profit is identical to bookkeeping costs and comprises of debits and credits on a firm's balance sheet. Thus, accounting profit is the difference between financial revenue and costs (AP=Debits -Credits). In contrast, economic profit is the difference between overall fiscal revenue and aggregate costs (EP=total revenue-sum of both implicit and explicit costs). If I am starting a business today, I would consider revenues such as the lease of property and cash sales of assets. Besides, I would consider costs such as rental, raw materials, office overheads, factory, and administration expenses.
Question 4
I would instead open up an amusement rental in my hometown. The business should offer recreational services such as concessions and carnival games, dunk tank and wall climbing, kiddie rides and pony and batting cages. Besides, the firm should provide coverage programs for inflatable units, obstacle courses, and combo and bounce units. The business should be middle sized with a capacity to handle at least two thousand clients during the peak periods. Legal requirements in opening up this kind of business include having general liability coverage for premises " operations, damages to premises rented, employees as automatic insured, no bodily injury deductible applies policies. The market is composed of different segments such as wealthy and middle-wage earners, young, youth and old people, local and foreign clients. The opportunities in this venture are due to the increased preference for leisure activities, the growing taste for physical amusements and, affordability of the residents in the hometown. However, expected challenges arise because the business is seasonal with peaks during weekends and holidays.
Question 5
The functions of money include store of value, medium of exchange, and a unit of account. For instance, as a unit of account, the US dollar provides a standard measure of the quality of commodities under the transaction. The currency assists both purchasers and suppliers to make decisions on the number of goods to buy or sell due to the attached monetary costs in the value of Dollars. Despite having little or no intrinsic value, people want US Dollar so much because it flows as the global trade currency. For instance, it is easy to convert the US dollar into other currencies. In my society, other things act as money (as a store of value) and include works of art, land and, baseball stamps and cards.
