BUSN300-1101B-12
Effective Presentation
Unit 2
Individual Project
By: Theresa Little
AIU
April 6, 2011 Introduction When judging whether the economy is doing well or not, it is important study the total income of everyone in the particular economy to determine the Gross Domestic Product (GDP).
The GDP estimates the total income and expenditures of an economy output of goods and services, which means for any economy as a whole income must equal expenditures. Although in calculating the formula for GDP, it ignores a very large portion of the activities that occur in an economy, policy makers depend on the GDP statistics and forecast to decide what course of action with economics, fiscal and investment policies. (Mankiw, 2008). GDP measures the flow of money because all expenditures end up as someone’s income. This paper will attempt to show how the gross domestic product is interpreted, determined and give some forecast of trends. Trends, Forecast, and Statistics
Some of the trends in GDP are:
 Unemployment – An Unemployment rate in the U. S. are rising, and is one main concerns in the U. S. since the recent recession. Job cuts have reduced the means by which a person can provide for him/herself and family.
 High Credit Card Usage – Is another cause of high unemployment because it has become a trend among American consumers, in May 2010 a study was done on consumer credit and it revealed that as of March 2010, $2.45 trillion was spent using credit cards and has created an artificial GDP.
 Real Estate Crisis – Lenders and bankers suffered significant losses from refinancing, reckless leading, and second mortgages. Due to Default mortgage loans and bankruptcies, foreclosed properties were selling for much less than originally and this cost banks more money.
 Automobile Industry - In addition to banks and lenders were hit hard by the mortgage problems, the automobile industry suffered as well because it was harder for people to take out new loans to purchase a new vehicle. Therefore, production decreased and subsequently causes more lay-offs. (www. studyforex.com, n. d.)

U.S. civilian unemployment rate forecast and the percent of unemployed seasonally adjusted.

Month Date Forecast
Value 50%
Correct +/-
80%
Correct +/-

0 Jan 2011 9.00 0.0 0.0
1 Feb 2011 9.1 0.2 0.4
2 Mar 2011 9.1 0.2 0.5
3 Apr 2011 9.0 0.2 0.5
4 May 2011 8.9 0.3 0.6
5 Jun 2011 8.7 0.3 0.6
6 Jul 2011 8.6 0.3 0.7
7 Aug 2011 8.5 0.3 0.7
8 Sep 2011 8.4 0.3 0.8
(www.forecasts.org, n.d.).

U.S. civilian unemployment rate past trend present value and future projection
Of percent of unemployed seasonally adjusted.

.
(www.forecasts.org, n.d.).

The gross domestic product is calculated using three methods:
 To calculate a nation’s GDP, all the prices of all goods and services which also includes goods and services that are bought as material or input to for producing the final goods.
 Total sum of value added to services and final goods at every stage of production.
 The total income generated during production on goods including taxes and tariffs on goods, services and wages.
The three known methods of calculating GDP, in which the results will be identical, are:
1. The expenditure approach – The gross domestic product is determined by calculating the final figure of total spending on goods and services. This method is based on: GDP = Consumption + Investment + Government Purchases + Net Exports.
2. The product approach – GDP is determined by calculating the total market value of goods and services produced.
3. The income approach – GDP is determined by calculating the total the income received by all producers in that particular country. (www.forecasts.org, n.d.).
In March, unemployment persons numbered 13.5 million and the unemployment rate of 8.8 percent changed very little, and since November 2010, the jobless rate has declined by 1.0 percent. (www.bls.gov, 2011).
This chart shows the unemployment rates for men 8.6 percent, women 7.7 percent, teenagers 24.5 percent, whites 7.9 percent, blacks 15.5 percent, and Hispanics11.3 percent and Asians 7.1 percent. The number of the newly unemployed which represents 8.2 million people has changed little since November 2010, but fell 1.3 percent. The rate for long-term (27 weeks or more) unemployed was 6.1 percent in March which increased the number from 43.9 to 45.5 percent over a month’s time. (www.bls.gov, 2011).

Conclusion
Even through GDP indicators are good sources of information when determining whether the economy is doing well or poorly, the GDP is not a completely thorough device to use when determining whether ever source has been exhausted because it leaves out so many factors in the everyday lives of people and their activities.

References

Retrieved on April 6, 2011 from, http://www.studyforex.com/gross-domestic-products.html.
Retrieved on April 6, 2011 from, http://www.forecasts.org/unemploy.htm.

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