...Economies are based on three main economic indicators, the gross domestic product, consumer and producer price indexes, and the unemployment rate. These indicators are the best indicators into the state of an economy. They let you know how well businesses are performing overall. The gross domestic product (GDP) measures the overall market value of final goods and services produced in a country in a year. Only goods produced in the country are counted in a countries gross domestic product. The gross domestic product is the most used economic indicator. Most countries use it worldwide. If the gross domestic product is high it usually indicates that the economy is doing well because businesses are doing well. A low gross domestic product means that fewer good are being produced. The two price indexes, consumer price index and the product price index are also used as economic indicators. An increase in either of these price indexes is a strong indicator of inflation. The consumer price index is used to keep tabs of changes in prices over time. There are eight major groups included in the consumer price index, food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services. The producer price index tracks the average change in prices at the wholesale level. Changes in prices are important because they indicate purchasing power. The unemployment rate measures workers over 16 years old who are not working...
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...Fundamentals of Macroeconomics The Gross Domestic product is the market value of the goods and services that are produced for the economy in a one year’s time frame. The gross domestic product measures the economy and helps to get a broader picture of economy. Real Gross Domestic Product is the value after products are produced and sold for that period. Real GDP show the earned income for the economy after all sales are final. The focus is to get the economy growing which will increase output and income. Growth is always good for the state of the economy. The Nominal GDP analyzes current market prices, when there are changes in market prices that take place in the current year. This is usually is due to inflation and deflation. Unemployment Rate is the total number of people that are without employment. The formula to measure the percentages unemployment rate is number of people unemployed divided by the number of people in the workforce in the US. You must be actively seeking employment and able to work to fall under the unemployment stats. You do not count the discouraged workers in the unemployment rates because they aren’t seeking employment. Inflation Rates is when price levels rise in the economy. Inflation is the guide to macroeconomic policies. Our government can’t stop inflation without causing a recession, but when unemployment is reduced it will stimulate growth and help increase inflation. Interest Rates are an annual percentage of principal when the use...
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...To evaluate the Real Gross Domestic Product we must use the equation Normal Gross Domestic Product equals the quantity of products being sold multiplied by the base year's price, or NGDP=QxP. With this equation we can calculate for the base year first: 10 shirts x $20 would be $200, and 5 hamburgers x $5 would be $25. We would then combine the total price for the year which is $225. To get the real Gross Domestic Product for 2014 we would use the quantities from 2014 with the prices of 2013. This equation would be 15 shirts x $20 is $300, and 10 hamburgers at $5 is $50. The real Gross Domestic Product for 2014 would be $350. (Investopedia, 2015) In order to calculate the growth rate for the Gross Domestic Product we must use the equation: 2014 real Gross Domestic Product minus the 2013 real Gross Domestic Product divided by the 2013 real Gross Domestic Product. This would be $300-$225/$225=0.333. This would mean that the growth rate for the real Gross Domestic Product would be 0.333 percent. (Investopedia, 2015) Full employment does not actually mean every person in the country has a job. Full employment means that every member of the labor force that was actively seeking employment is now employed. This level of employment involves everyone except the chronically unemployed as well as members of the workforce that are now retired. The chronically unemployed include members of the workforce that are capable of working, but are unable to find a job due to not having the skills...
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...think of unemployment, the housing market, taxes and income. These thoughts are correct. Microeconomics is the study of growth between people and their resources. Economics studies land, income, labor, taxes, investments and government expenditures. Mostly, economics measures the behavior of industries, the government and countries as a whole. The study of economics will determine connections between employment and spending as well as the growth of the economy. There are many factors that can affect the economy. These factors may include: the unemployment rate, inflation rate, interest rate and gross domestic product. , The gross domestic product is the total market value of goods and services produced in the economy over a year. The gross domestic product is one of the primary indicators used to measure the health of the economy. Economists rely on the comparison of the gross domestic product from year to year to determine if the economy has grown. The real gross domestic product is the total market value of goods and services, stated in prices over a year. The real gross domestic product provides more accurate numbers. The nominal gross domestic product is the gross domestic product where inflation has not been taken into account. Gross domestic product may appear higher than it really is if inflation is not accounted for. The unemployment rate is the number of people in the workforce divided by the number of people unemployed. The unemployment rate is...
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...FACTORS THAT AFFECT THE GROSS DOMESTIC PRODUCT OF THE PHILIPPINES Table of Contents I. Introduction 1. Background of the Study 2. Statement of the problem 3. Objective of the study 4. Significance of the study 5. Scope and limitations II. Review of related literature 1. Unemployment Rate 2. Unemployment Rate and Gross Domestic Product Growth Rate 3. Savings 4. Savings and Gross Domestic Product Growth Rate 5. Inflation Rate 6. Inflation Rate and Gross Domestic Product Growth Rate III. Operational Framework 1. Presentation of Data 2. Description of Variables 3. A-‐priori Expectations 4. Model of the Study IV. Methodology V. Empirical Results and Interpretation 1. Summary of Data 2. Regression of the Model 3. New Model of the Study 4. Testing for Multicollinearity 5. Testing for Heteroscedasticity 6. Testing for...
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...play a big role in increasing the country’s Gross Domestic product? I. Rationale In every country, gross domestic product (GDP) serves as an indicator to determine how well does the country performed for a specific period of time. It is an estimation of the value of the total goods and services it has produced. It matters to us when our country’s gross domestic product constantly increases from period to period, but is there really a massive increase in a country’s gross domestic product when it is election year? It is said that during this time, gross deomestic product is expected to increase for factors such as manufacturing, construction, and financial intermediation really performs well due to election related processes. With this comes the question of “what really is the effect of election year on a country’s gross domestic product?”. (http://www.investopedia.com/terms/g/gdp.asp) II. Research Problems What is the role of election year in a country’s gross domestic product? Does it automatically mean that during election year, gross domestic product is expected to increase? III. Research Objectives To find out if the election period contribute dramatically in the country’s gross domestic product.. To know whether the best year that estimates like manufacturing, construction and financial indicators perform best during election year. To determine whether this sets a standard in a country’s gross domestic product for the following years or not. I. Literature...
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... there are a few indicators that we can take a look at to understand better the current status of the economy. Examining indicators like unemployment rate, inflation and the gross domestic product can give economist that necessary glimpse, as we will do now. Unemployment Rate According to the U.S Bureau of Labor Statistics, the "total nonfarm payroll employment increased by 173,000 in August, and the unemployment rate edged down to 5.1 percent." ("Regional and State Employment and Unemployment Summary," n.d.) As indicated by the household study information in August, "the unemployment rate edged down to 5.1 percent, and the quantity of unemployed persons edged down to 8.0 million. Throughout the year, the unemployment rate and the quantity of unemployed persons were around 1.0 rate point and 1.5 million, separately. The quantity of persons unemployed for fewer than five weeks diminished by 393,000 to 2.1 million in August. The quantity of long haul unemployed (those jobless for 27 weeks or more) held at 2.2 million in August and represented 27.7 percent of the unemployed. In the course of recent months, the quantity of long haul unemployed is around 779,000." ("Regional and State Employment and Unemployment Summary," n.d.) The BLS uses data collected from household surveys and establishment surveys to analyze employment and unemployment rates. Consumer Price Index and Inflation “The Consumer Price Index (CPI) is a measure of the average change over time in the prices...
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...studies can be current or historical data. Subjects that are more commonly studied and tracked are the Gross domestic product (real and nominal), unemployment rate, inflation rate, and interest rate. Gross domestic product is the value of all goods and services produced in a country within a year. It also consists of what our government invest and spends during that year while adding the value of exports and subtracting the value of the imports we import from other countries. The only difference between real and nominal gross domestic products is that real gross domestic products are adjusted for our economies inflation while nominal gross domestic products aren’t. This simply means that nominal gross domestic products will present themselves higher than the real gross domestic products. Another subject that macroeconomics covers is the unemployment rate which is always a topic of discussion in the media. The unemployment rate is simply the percentage of people without a job. Different states have different percentages and is usually used by the public and government. The data collected over the years will show massive layoffs and show the percentages for those years. If there was a massive layoff the percentages for the unemployment rate would be much higher for those specific years. This is the data that is collected over the years so researchers can show how unemployment rates have either been higher or lower from year to year. It also allows researchers, the public, and...
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...concerning the aggregate economics, and learning economy of situation known as making a difference about unemployment, income rates of higher levels, and several various different factors (Investopedia, 2012). This information will define several or many terms are used after each person whose deal with this subject macroeconomics, and include two or more examples of economics, which could affect other ideal, and issues concerning both level for higher government, and every individual level. A gross domestic product is a major word or term people need to understand is known as what is use as a gross domestic product that is also referred as the Gross Domestic Product. This product should have the rate for the value for many services, and choosing goods, which is produced within our economy during this particular price quoted in stated this year (Colander, 2010). When people produce goods usually earn the amount of income from businesses purchasing products because of the growth and the economy. This should mean certain type funds or amount of raise increases throughout each year. In this economy the actuality gross product is inflation, which adjusts some type measurement to give an estimated kind of value on any or good, and better, services that starts at the base year amount. The real product is usually considered as a constant amount. However, after the real gross product used a price index to create, which measurements should show exactly a higher amount of funds, which...
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...Economic system as a whole. It allows us to understand topics such as economic growth, inflation rate and interest rate, changes in employment and unemployment, our trade performance with other countries and the success or failure of government economic policies. Macroeconomics also shows us how examples of economic activities affect Government, households, and businesses. Gross domestic product (GDP) The Gross Domestic Product (GDP) is used to measure the economy’s goods and services used in a specific period. These measurements are calculation in two ways it’s population income or the populations’ expenditures. The most common way to measure is by using the expenditures method. The expenditures consist of four mechanisms such as government purchases, consumptions, investments, and net Exports. The dollar amount spent on good and services we as individuals consume are added to the amount business invest or spend to make those goods and services. With the exceptions of welfare and social security the government also contributes to the goods and services used to measure the GDP. We then take the goods and service we exports to other countries and subtract the goods and services we purchased and use from others countries to come up the GDP formula C+I+G+(X-M) = the Gross Domestic Product of an economy. Real Gross Domestic Product The Real GDP takes the base price of an item and multiplies it by the quantity used in a specific year (2011). Then takes the same base price...
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...Fundamentals of Macroeconomics Paper ECO/372 Amy J. Eulett March 4th, 2013 Dr. Mike Thirtle There are many differences between the gross domestic products (GDP), the real GDP, the nominal GDP, the unemployment rate, the inflation rate, and the interest rate. There are also many different examples of economic activities. Groceries, massive layoff of any employees along with any decreases that may accrue in the taxes are all activities that can affect someone’s business, someone’s household or even the government. They are all related in some way or another. The Gross Domestic Product can also be called GDP for short. The GDP is the market value of any of the final services or goods that within the year was produced in the economy. The real GDP is from the current year that is inflation adjusted that measures the reflects the services and goods value. The nominal GDP is when the gross domestic product is figured out but has not even been adjusted for any inflation. The unemployment rate is the total amount of the labor force that does not have a job but are wanting and looking for a job. The inflation rate is the inflation or the rate being measured to see about any price increases. The interest rate is a current rate that is paid for using the money that was charged at an earlier time. The economic activities is when someone can provide goods to someone else that they hunt, fish, or make themselves. For example, hunting, fishing, manufacturing or even mining. With purchasing...
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... Professor Bartels ECO-201 March 28, 2012 Gross Domestic Product The gross domestic product (GDP) is one of the main indicators used to measure the health of a country’s economy. Economists measure growth with changes in real gross domestic gross domestic product (real GDP)---the market value of final goods and services produced in economy stated in the prices of a given year (McGraw-Hill 155). In plain simple terms gross domestic product is the economic report card of the United States. The parts that make up GDP are: Growth where when production and sells are good income is good with a growing economy with total output and total income increasing. Business cycle is the upward or downward movement of the economic activity that occurs around the growth trend (McGraw-Hill 158). The business cycle phases are: The peak, The downturn, The trough, and The upturn Unemployment in where a percentage of people who are fully capable of working but they can’t attain employment. Unemployment is social problem and a government problem. Inflation is a continual rise the price level. The consumer price index (CPI), the producer price index (PPI), and the GDP deflator are all price indexes used faced by producers (McGraw-Hill 158). GDP with its components of growth, business cycle, unemployment and inflation affects everyone in the country. A good report card we will usually see low unemployment and wage increases and a booming economy. A bad report...
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...Running head: MACROECONOMIC IMPACT ON BUSINESS OPERATIONS Macroeconomic Impact on Business Operations Laurie Wilkinson University of Phoenix Macroeconomic Impact on Business Operations The Federal Reserve has the unique ability to control the money supply and stimulate the economy when needed. Any actions of the Federal Reserve can have an impact on macroeconomic factors and the balance in the economy. This paper will discuss the tools used to control the money supply, the effects of monetary policy on macroeconomic factors and the best way to achieve a balance in the combinations of monetary policy. The Federal Reserve has several tools available in order to control the money supply. The Reserve Ratio allows the Fed to raise or lower this ratio to affect the amount of money and ability a bank has to lend. The Open Market Operations is also available, where the Fed can buy or sell government bonds to the public and commercial banks. Depending on which they do this action can either increase the assets on hand or increase the reserves for the banks. Increasing the reserves allows banks to lend more. Finally, the Discount Rate is available to use. The Fed can make short term loans to banks, increasing the amount that the bank can lend out which in turn increases the money supply. If the bank increases the discount rate then banks will not want to borrow as much and it restricts the amount of money they have to lend. Monetary Policy can be looked at as a way the Federal Reserve...
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...FIN 382 COMPANY ANALYSIS GROUP ASSIGNMENT PREPARED FOR : PUAN NORSALIZA BINTI ABU BAKAR PREPARED BY : KHAIRIL AZMAN BIN RADZALI 2010459076 DHARWIS BIN HASNIM 2010699142 MUHAMMAD FAIDI BIN SAFARRUDIN 2010408132 ELMIRUSHUDA BINTI AMERUDIN 2010248112 FAZLIAH NOOR BINTI MOHD FOUZI 2010834506 GROUP : JBM114 6A DUE DATE : 21st DECEMBER 2012 ECONOMY ANALYSIS 1.0 WORLD ECONOMY The world economy can be evaluated in various ways, depending on the model used, and this valuation can then be represented in various ways. It is inseparable from the geography and ecology of Earth, and is therefore somewhat of a misnomer, since, while definitions and representations of the "world economy" vary widely, they must at a minimum exclude any consideration of resources or value based outside of the Earth. For example, while attempts could be made to calculate the value of currently unexploited mining opportunities in unclaimed territory in Antarctica, the same opportunities on Mars would not be considered a part of the world economy – even if currently exploited in some way – and could be considered of latent value only in the same way as uncreated intellectual property, such as a previously unconceived invention. It is common to limit questions of the world economy exclusively to human economic activity, and the world economy is typically judged in monetary terms, even in cases in which there is no efficient market to help valuate certain goods or services,...
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...a country’s economy. Macroeconomics can be called the “big picture” of economics at a national level. Rather than focusing on individual markets, macroeconomics looks at production and consumption of the economy as a whole. The most important basics of macroeconomics include gross domestic product, real gross domestic product, nominal gross domestic product, inflation rates, interest rates, and unemployment (Colander, 2010). PART I The gross domestic product (GDP) is used as a way to determine a country’s economic health. It is basically the amount of services and products that are produced over a period of time, usually a year. To measure the GDP in its simplest form one would add up what everyone earned in a year, or add up what everyone spent. In a perfect world, the two total results would be about the same. The real gross domestic product is adjusted for inflation. To adjust for price changes, the real GDP is measured using the prices from a specific year. For example if real GDP’s from various years are measured, each year uses the quantities from its respective year. However, the prices are all from the base year, only the differences in volume are reflected. The nominal gross domestic product is not adjusted for inflation. Nominal GDP is the value of all goods and services produced in a country during a particular year (WiseGeek, 2013). However, because of inflation, nominal GDP can be misleading. The value of a dollar was different in 1960 than it is today. A country...
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