PRINCIPLE OF ECONOMICS AND SIGNIFICANCE

Running Head: PRINCIPLE OF ECONOMICS
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Principle of Economics
Agriculture Industry of the United States

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1. Introduction
The Agriculture industry of United States of America is amongst the most
productive industries of the nation and this is the reason why it is deemed as one of the
major industries of the country. It is the largest net exporter of food and this advantage is
with the agricultural industry due to access to vast area and various climatic conditions.
This industry contributed $1.043 trillion to US GDP (gross domestic product) and the
output of America’s farm contributed $132.8 billion in 2019, which was the largest
contribution in comparison to any other sector (Kassel & Morrison, USDA ERS, 2020).
This sector includes forestry, food, vegetables, fishing, poultry, tobacco products,
beverages, and every farm-related product. This discussion highlights the various facets of
the American agriculture industry.
2. Size and/or Growth of Industry
Every year Agriculture industry supplies greatly to the nation. The recent figure
shows contribution of $1.056 trillion to the US gross domestic product resulting in it
becoming the world largest economy by nominal GDP and net wealth. It had the sixth
highest per capita GDP in 2020. Today there are 2.2 million farms in an area of 845
million acres where farming alone contributes $132.9 billion to the US economy. There are
some sectors in the agriculture which has a huge contribution to US GDP every year.
These products includes soybeans which contributes to 60% which is $23 billion worth,
45% of the contiguous US is used to feed livestock (Lepley, 2019), corn contribute $74.7
billion to the US economy (Das, 2020), cotton production is $25 billion employing over
200,000 people in total, rice contribute $6.3 billion employing 45,000 people in total,
sugarcane contribute 22.33% (Stroh, June), food and vegetables contribute $992 billion to

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the US economy. Over 600,000 jobs are brought forth by this industry in the nation on
yearly basis (Kassel, Ag and Food Sectors and the Economy, 2020).
3. Macroeconomic Indicator or Policy and Its Importance and Impacts
It has been observed that some macroeconomic policies are necessary to develop a
stable economic environment in the whole economy by traders. The key pillars that are
used to monitor macroeconomic policy are fiscal policy, monetary policy and exchange
rate policy. These policies are analysed to improve agricultural productivity growth of the
industry. It includes the overall economic condition from food to crops. It indicated the
growth rate in yields, livestock density. Low and stable inflation rate indicates balance in
real GDP growth, exchange rate and unemployment rate. Trade and investment policy
provide a large market for traders to supply goods and services in a vast area. Finance
policy develops a society by facilitate productivity in agriculture. Tax policy raises
government revenues, which can finance public services. International co-operation on
agricultural research give universal benefits (Kinderson, 2019).
Macroeconomic policies are important to the nation because it creates a movement
of entire market. They have a particular role in shaping the economy. Every trader of the
country keeps an eye on the analysis of recent data which was predicted by the help of
macroeconomic policies.
Its impact on agriculture industry is estimated every year using econometric
analysis and time series data. It gives the result of the total production of different items. It
changes the whole scenario of the industry if the estimating result comes less than 0.25 %,
it hypothetically states that industry’s total production is unbalanced, if result comes out
more than 0.25% than hypothetically it states that industry’s total production is balanced
(Snell, 2020).