Factors Affecting GDP In US
20 Pages5515 Words50 Views
Added on 2021-06-16
Factors Affecting GDP In US
Added on 2021-06-16
ShareRelated Documents
Factors affecting the GDP in the United States1Factors affecting the GDP in the United StatesStudents name:Students ID:Institution:
Factors affecting the GDP in the United States21.IntroductionThe GDP is the main indicator of the growth of any economy [1]. Countries around the globe work to improve their GDP since it is the type of indicator that shows what the overall state of the economic affairs is. Thus, GDP is the worth of all the finished goods and services in monetary terms which are produced or manufactured within the country. The gross domestic product normally provides advancement in all the fields in a particular country. GDP usually grows faster when business within the country take more labor and in turn give the people more money to spend thereby leading to an increase in demand. Contrary, if there is no economic growth within an economy, business will become stagnant and will be forced to downsize. Therefore, employment will become inactive or shrink and the demand the standards of living of the people will become affected adversely. The economic activity of a country experiences growth periods and contractions at various levels and the fluctuation forms the business cycle. As a result, the gross domestic product is usually higher I developed countries compared to undeveloped countries where the gross domestic product is usually low. 2.BackgroundThe effects of the global financial crisis began to be felt in the middle of 2007 and 2008 since theworld stock market fell and large financial institutions collapsed and began to be bought out by the government in wealthier nations [2]. The nations offered rescue packages and bailouts to the financial system.The United States is outstandingly the world largest economy nominally. It has a nominal GDP of $14.2 trillion as of 2009 which was about times three of the 2nd largest economy in the world, Japan [3]. Consequently, its GDP by the Purchasing Power Parity (PPP) was almost as twice as China’s [4]. from this, it is evident that the economy of the United States maintains a very high
Factors affecting the GDP in the United States3level of output per individual. However, the United States gross domestic product declined in 2009 due to the negative contribution from the fixed investment which was nonresidential, private investment and exports [5].The United States gross domestic product has four components [6]. The first component is the personal consumption expenditure which can be classified as all the goods and services which are produced for the use by the households. Personal consumption expenditures account for almost 70 percent of the total gross domestic product [7]. The second component is a business investment. Business investment entails the goods and services which are purchased by the private sector [8]. The next component, government spending, entails all the federal, state and local government. Finally, the gross domestic product component is net exports. The net exports are the dollar value of total imports differentiated from the total exports [9]. 3.Problem statement The following study aims at comparing gross domestic product determinants in the US. It involves the analysis of statistical data of the United States GDP and other factors like consumer price index, real interest rate, and broad money. The research aims to identify the dependence of the above-mentioned factors on the gross domestic product as the dependent variable and the other three factors as the independent variables. 4.HypothesisH1: There is a positive and significant relationship between Gross Domestic Product and Consumer Price IndexH2: There is a positive and significant relationship between Gross Domestic product and real interest rate
Factors affecting the GDP in the United States4H3: There is a positive and significant relationship between Gross Domestic Product and Broad Money5.Parameters and the sample population The parameters identified for analysis are gross domestic product, consumer price index, interest rate, and broad money.a.Gross Domestic Product (GDP)The Gross Domestic Product can be termed as the value n monetary terms that are attached to all finished goods and services that are manufactured within a particular state’s border in a specific time period [10]. In the United States, the GDP is calculated on a quarterly basis and then annualized for annualized for each quarter [11]. The Gross Domestic Product is, therefore, a broad measurement of the overall economic activity of a nation thereby earning the nickname, the godfather of the indicator world. The Gross Domestic Product is very important in that it is used to gauge the standard of living in a particular country [12]. The uniformity of the Gross domestic product has enabled the economic indicator to be used in comparing the productivity ofthe numerous nations with an accuracy of the highest degree [13]. GDP is tracked over a long span of time and is used in gauging the economic decline or growth of a nation [14]. As a result, it is an important tool that can be used in determining whether or not a country is in recession. The GDP can be determined primarily using three methods, expenditure approach, the output approach, and the income approach.b.Consumer Price IndexThe consumer price index (CPI) scrutinizes the weighted average of prices of a basket of consumer services and goods [15]. The CPI is measured by taking the variations in the price of
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents
Expenditures Approach to Calculating GDPlg...
|13
|2649
|279
Macroeconomics: Nominal and Real GDP of USlg...
|12
|1603
|20
Economics For Business - Assignment Samplelg...
|17
|3703
|50
Computation of National Incomelg...
|18
|2803
|32
Approaches to Calculating GDPlg...
|18
|3443
|281
Impact of Low Real Wage Growth on the AD AS Curvelg...
|13
|2684
|63