...I discussed the GDP in my first post and decided to post a response to this one too; the .U.S. Department of Commerce released fourth quarter real gross domestic product rates of 2014. According to the Bureau of Economic Analysis (2015), the value of produced goods and services in the U.S. increased 2.2 during this quarter (para. 1). This means that the production of goods adjusted for price changes for the period when the second estimate was released on February 27th. That is a 2.8 percent drop from 5.0 percent third quarter GDP results of 2014 (U.S. DOC, 2015, para. 1). As previously stated GDP measures the economy performance of the nation or country during a certain period of time (annual or quarterly). GDP measured in terms of dollars regard the total of all goods and services produced (McConnell, Brue, & Flynn, 2015); unfortunately, there are several shortcomings or limitations in measuring the total output or national welfare. The shortcomings of GDP measure both total output and total utility (McConnell, et al., 2015, p. 561); the total output shortcomings include non market activities (household production) such as homemaker services and parental childcare (Lee, n. d.; Toward, 2010). Non market activities are products and services that are produce by people and are not bought and sold on the market. Legal economic and illegal activities are underground activities, the second type of shortcoming of GDP. Underground activities consist of products or services purchased...
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...1. What was Real GDP for 2009? The real GDP for 2009 was 14.54 trillion. A. What does GDP tell us? GDP tells us the total dollar value of all goods and services produced over a specific time. B. How did GDP change from 2008? In 2008, the GDP was 14.58. It decreased in 2009. C. What caused these changes? The cause for these changes were due to the recession. Government spending also increased. 2. What was GNP for 2009? The GNP for 2009 was 14.74 trillion. A. What is the difference between GDP and GNP? The difference between GDP and GNP is, GNP includes net foreign income rather that net export and imports. GNP adds net foreign investment income. GDP measures the nation’s economy performance. GDP is determined by the market value of all final goods and services made within the U.S. boarders. GDP is focused on output rather than who produces it. B. How did GNP change from 2008? The GNP in 2008 was 14.67 trillion. Therefore the GNP was lower in 2008. C. What caused these changes? The changes might have been changed due to a decrease in values of goods and services. 3. What was National Income (NI) for 2009? The national income for 2009 in trillion was 14.49. A. What does National Income tell us? The national income tells us how much money is being earned within the United States. The national income helps track the health of the country’s economic resources. B. What is the difference between GNP and NI? The difference...
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...By indicating the economic activity within the U.S. with real gross domestic product (GDP), the economic growth of the nation can be measured. This value could be found in numerous ways; either using the value added approach, income approach, or the expenditure approach. The value added approach is when firms are surveyed to take note of their profit, the income approach is measuring GDP by dividends (the total of wages earned by labor), however the most commonly used method to find the GDP would be the expenditure approach. This approach is where the consumer, investment, and government spending are added together along with the difference of exports and imports. While real GDP is often relied on to be a measurement of the general standard...
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...The influence of Gross Domestic Investment per capita and Education Index on the GDP per capita. I. Introduction The purpose of this paper is to investigate the influence of the Education Level (the human capital), and investment in the economy per capita on the GDP per capita, that is on the welfare of citizens. These two factors has been chosen because the author of this paper believes that human capital from the social side and investment capital from the economical side plays both crucial and important role, leading to the real long-run economical growth. Human capital and economic growth have a strong relationship. Human capital affects economic growth and can help to develop an economy through the knowledge and skills of people. On the other hand money investment in the economy plays a material role in the development of countries and at the end in the welfare of people. Investment in the huge economic projects with real production value like food and machine industries are the final products which people are using in everyday life. Thus the economy`s path of production is coming from the ideas born in human brain to the real realized product. II. Method This research uses data from 23 observations (23 countries). The regression model consists of one dependent and two explanatory variables. The dependent variable is GDP per capita (constant 2005 US$). The per capita GDP has been chosen because it provides a more precise comparability of wealth of people of different...
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...spending by households on goods or services. For By using gross domestic product, government can also weigh the income and defines as the expenditure or money spending by households on goods or services. For By using gross domestic product, government can also weigh the income and defines as the expenditure or money spending by households on goods or services. For By using gross domestic product, government can also weigh the income and defines as the expenditure or money spending by households on goods or services. For By using gross domestic product, government can also weigh the income and defines as the expenditure or money spending by households on goods or services. For By using gross domestic product, government can also weigh the income and defines as the expenditure or money spending by households on goods or services. For By using gross domestic product, government can also weigh the income and defines as the expenditure or money spending by households on goods or services. For By using gross domestic product, government can also weigh the income and defines as the expenditure or money spending by households on goods or services. For By using gross domestic product, government can also weigh the income and defines as the expenditure or money spending by households on goods or services. For By using gross domestic product, government can also weigh the income and defines...
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...Calvin B. McIlwain 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...
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...U.S. gross domestic product (GDP), U.S. manufacturing employment trends, and the state of Illinois employment trends in order to forecast company sales over the next few years. Specifically, this paper analyzes the GDP and the employment trends over the past four years. It also discusses the effect GDP has on the U.S. economy (such as inflation) and how technology and the lack of skilled labor have affected the employment trends. Statistics will also be shared showing the change in GDP and the different employment trends. The consumer price index over the last four years will also be examined to measure the pace of inflation. Keywords: gross domestic product (GDP), employment trends, inflation, consumer price index (CPI) Taking it to the Net So how do you forecast a company’s sales for the next two years? What kind of data do you review to make an educated forecast? A company’s future sales can be determined by many different factors, some of these factors include: the gross domestic product in the United States, employment trends in the manufacturing industry and the consumer price index. The state of Illinois’ employment trends will also be discussed and what economic changes have inclined the changes in them. Government bureaus such as the Bureau of Economic Analysis and the Bureau of Labor Statistics have created countless databases to disclose all of this information to the public. So what do these factors mean? Gross domestic product or GDP is the...
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...1 1.a) Units of Price of Nominal GDP Real Year Stuff Produced Stuff GDP Deflator GDP 2003 500 $20 $10,000 95.2 $10,504 2004 520 $21 $10,920 100.0 $10,920 2005 560 $24 $13,440 114.3 $11,759 Nominal GDP = (Units Produced in a Year) x (Price in a Year) Price Deflator = Ratio of Price in Each Year to Price in the Base Year, multiplied by 100 (Note: The Price Deflator for the base year is given to be 100.0) Real GDP = (Nominal GDP for Year t) x (Deflator in Base Year) / (Deflator for Year t) The numbers you calculated may differ slightly due to rounding. b) Growth Rate of Nominal GDP between 2004 and 2005: (13,440 / 10,920) - 1 = 0.2308 or 23.08% c) Inflation Rate between 2003 and 2004: (100.0 / 95.2) - 1 = 0.0504 or 5.04% d) Annualized Growth Rate of Real GDP between 2003 and 2005: (11,759 / 10,504)1/2 - 1 = 0.0581 or 5.81% Note that the 1/2 power is used because the growth took place over two years, and you want to "annualize" the growth. That is, you want to compute how fast real GDP would have to grow each year to reproduce its actual growth over the two-year period. 2a) Here is a table with the 2010 data obtained from the FRED database (http://research.stlouisfed.org/fred2/). From the FRED home page, follow the links to “Gross Domestic Product (GDP) and Components” and then “GDP/GNP.” The quarterly nominal GDP figures are designated by the series ID “GDP.” You can take real GDP directly from the variable “GDPC1” (one...
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...This report discusses macroeconomic factors that impact both the automotive and health-care industries. Interest rates, consumer price index (CPI), consumer confidence, Gross Domestic Product (GDP), wage rates, and inventory levels impact the macroeconomic environment to influence these industries in the short run. Consumption as a percentage of the GDP depicted in table 1 indicates a continuous declined in consumer spending from 2005 through 2010 and suggests that consumers are becoming more conservative with disposable income spent on elective health-care products and procedures as-well-as new vehicle purchases. As the nominal interest rates indicate in table 2, the FED attempted to encourage consumer spending by decreasing the interest rates to encourage expansionistic economic activity, which would also be a positive influencing factor for both the health-care and automotive industries. The automobile industry is volatile by nature and heavily influence by macroeconomic factors, while the health-care industry enjoys an inelastic environment. Macroeconomic factors influence the health-care industry, it is unlikely essential health-care demand will decrease in the short term; however, elective health-care products and services will likely suffer as will new vehicle purchases as consumers remain conservative. The future is not as bleak as one might anticipate. The automotive industry is traditionally volatile and dependent upon the macroeconomic environment and currently producing...
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...Analysis on M2 & CPI of China, 1990-2014 The chart below demonstrates the broad money (M2) and Consumer Price Index (CPI) of China during the period of 1990 to 2014. The data is picked from the official website of the National Bureau of Statistics of China. (Data source: National Bureau of Statistics of China) According to the graph, both two figures show an uptrend in last three decades, and they shows a positive correlation. The M2 of 1990 was only about 1,500 billion yuan, and it increased gradually in the next decade. The growth rate of the CPI kept raising every year, and after the year of 2008 it witnessed a remarkable rise, reaching at 122,840 billion yuan in 2014, which is 80 times of the figure of 1990. At the same time, the CPI ascended from 216.4 in 1990 to over 600 in 2014. During 1993 and 1996, the increase was apparently more rapid than other years. However, in 2009 the number decreased slightly, and this is the only year in which it goes down. The increase of paper money accelerates the raising speed of M2, and as a result the CPI goes up as well. During 1993 to 1996 the growth rates of CPI were almost 25%, which is incredibly high. Serious inflation was happened around that period, and it turned better between 2000s. In 2010s, however, the bad circumstance seems back again. The amount of M2 rocketed dramatically during the past few years, and it may cause another serious inflation in the near future if the government do not take effective measures...
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...At the end of 1996, a study of the Consumer Price Index was done under the leadership of Michael Boskin in which they declared that the CPI has been overstated and that the index should have been at a rate of 1.8% as opposed to the reported amount of 2.9%. His report also included that the CPI had been overstated similarly of the past twenty years. The finding in his report shows that the government was doing a good job at controlling inflation and that productivity was higher than previously reported. Since our government uses index to adjust stats such as GDP per capita, a reduction in CPI shows our economic performance as improved. We cannot afford to take his report into consideration as there are many flaws and deceptions in his findings. The CPI is made up of many details below are a few key points that will help that will help to reveal the flaws and deceptions regarding Boskin’s determination. Wrong Market Basket The BLS conducts a survey every ten years on consumer behavior in order to set up a weighted “market basket of goods and services” that is supposed to represent outlays of the average citizen and is adjusted for any changes they find in lifestyle. These adjustments only consider two lifestyles the CPI-W which represents living conditions for lower middle class and poor urban household getting their income from wages and salaries as clerical non-executive workers, and the CPI-U which represents non-wealthy urban consumers inclusive of wage earners, salaried...
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...measure of economic well-being – real, per capita GDP. Further, if we want to see how our economic well-being is changing over time, we can calculate how real GDP is changing in percentage terms (for example, real GDP grew 4% last quarter). Now, we turn our attention to another important measure of the economy. We want to measure how the cost of living changes over time. The main intuition here is that, over time, peoples’ incomes and the prices of goods and services increase. 30 years ago an ice cream sundae cost $1 and a typical economics professor earned $35,000. Now, a (bad) ice cream sundae costs $4.50 and a typical economics professor earns $70,000. Main Parts of the Notes: 1. How do we measure the cost of living? a. Using the GDP price deflator b. Constructing the Consumer Price Index (CPI) c. Deriving an inflation rate from the CPI 2. How do we adjust for inflation when comparing dollar values over time? Minor Point: What are the weaknesses of the CPI as a measure of the cost of living? Measuring The Cost of Living: There are two broad measures of the cost of living: the GDP price deflator and the CPI. Both measures move together, so they paint a similar picture of the cost of living. We will briefly discuss the GDP deflator first, and then move on to the more important CPI. GDP Price Deflator: Last time we saw how we can calculate both nominal and real GDP. The idea here is to construct a measure (and...
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.... Assume that a typical consumer basket includes 50 bars of each type. Compute a consumer price index for each year and determine the percentage change in the index over the two years. Last year, Jimmy’s consumer basket was $100 worth of Snicker’s bars, and $50 worth of Butterfinger bars for a total consumer basket of $150. This year, Jimmy’s consumer basket is $75 worth of Snicker’s bars, and $87.50 worth of Butterfinger bars for a total consumer basket of $162.50. The percentage change in the index over the two years is as follows: (162.50/150) – 1.0 x 100 = .083 or 8.3% Calculate Jimmy's nominal spending on candy bars in each year. Does nominal spending increase or decrease? Nominal spending is the total value of output produced in each year. Last year, Jimmy spent $150 on Snickers (75 x $2) and $100 on Butterfinger bars (100 x $1) for a total of $250. This year Jimmy spent $180 on Snickers (120 x $1.50) and $157.50 on Butterfinger bars (90 x $1.75) for a total of $337.50. Jimmy’s nominal spending increased this year. Using the first year as the base year, determine Jimmy's real spending on candy bars in each year. Does real spending increase or decrease? Real spending is the total value of output produced in each year valued at the prices prevailing in year one. Last year, Jimmy’s real spending is the same as his nominal spending - $250. This year, Jimmy’s real spending on Snickers is $240 (120 x $2) and $90 (90 x $1.00) on Butterfinger bars for a total of...
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...CPI, consumer price index, is used to measure the cost of living or what amounts to the same thing. CPI also measures the change in the amount of money that people need to spend to achieve given standard of living. The CPI is not a perfect measure of cost of living for two reasons. CPI does not measure all the changes in the cost of living. The cost of living rises in a certain product, but only the price of the product increases the CPI and not the quantity. The reason CPI does not calculate the quantity because the market basket is fixed. So part of the increasing in spending does not show up as an increase in CPI. Certain parts of the cost of living that are measured by the CPI is not always measured accurately. The reason for that...
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...Econ201 Macro-economy Spring 2013 Wesam Almadani LAG140 Table of Content Overall state of Economy in Saudi Arabia Demographic profile of Saudi Arabia GDP in Saudi Arabia CPI and Inflation Rate in Saudi Arabia Unemployment Rate in Saudi Arabia Economic problems in Saudi Arabia Economy in Saudi Arabia Saudi Arabia is the largest Arabian Country which is located in southwest Asia. It clenches the largest free market economy in the Middle East and North Africa. The geographic setting of Saudi Arabia provides an easy entrée to export the markets of Europe, Asia, and Africa. Saudi Arabia is an oil-based economy with a robust government control over the main economic activities; it approximately holds 17% of the worlds established petroleum assets. Saudi Arabia grades the largest exporter of petroleum, and plays a primary role in OPEC. The petroleum sector alone interprets for roughly 45% of GDP, 80% of budget revenues, and 90% of export earnings. The following shows the demographic profile of Saudi Arabia: Population | 26,939,583 includes 5,576,076 non-nationals | Dependency Ratio | total dependency ratio: 46.9 % youth dependency ratio: 42.6 % elderly dependency ratio: 4.2 % potential support ratio: 23.6 | Population Growth Rate | 1.51% | Net Migration Rate | -0.62 migrant(s) / 1,000 population | Urbanization | urban population: 82.3% of total population (2011) rate of urbanization: 2.38% annual rate of change...
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