The Economic Health of The USA

This document explores the relationship between GDP, taxes, and interest rates in the USA. It discusses economic indicators, such as GDP, NDP, NI, PI, and DI, and provides insights into the current state of the US economy.

Running head: THE ECONOMIC HEALTH OF THE USA
The Economic Health of The USA
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Table of Contents
Relationship Of GDP with Taxes and Interest Rates.................................................................2
Economic Indicators of the USA...............................................................................................2
Relationship between GDP, NDP, NI, PI and DI......................................................................2
References:.................................................................................................................................4

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Relationship Of GDP with Taxes and Interest Rates
A reduction of taxes leads to the ratio of tax to nominal Gross Domestic Product to
fall (Pomerleau & Potosky, 2014). A fall in taxes increases disposable real income, raising
spending activities, garnering production and hence raising the GDP. An increase in the
interest rates has a two-fold effect: it incentivizes savers to save more, but it discourages
investors as the rate of borrowing increases.
Economic Indicators of the USA
The United States of America is the largest economy in the world in terms of nominal
GDP which is $21.3 trillion as of April 2019 ("U.S. Data And Statistics | Usagov" 2019). Its
per capita GDP is $64,767. GDP measured in per capita terms is the value of GDP divided by
the total population in a given year. In purchasing power parity terms, US in 2019 ranks
second in GDP and eighth in per capita GDP.
The unemployment rate in the USA is 3.6 % as of April 2019 ("U.S. Data And
Statistics | Usagov" 2019). The annual rate of inflation as recorded on May 2019 was 1.8%,
down from 2.0% in the previous year.
As per the Human Development Report of 2018, US was ranked 13 with a Human
Development Index of 0.924 ("Human Development Reports" 2019). The HDI is a composite
of three indices to measure human development; life expectancy at birth, education and per
capita GDP.
Relationship between GDP, NDP, NI, PI and DI
GDP is the monetary value of all final goods and services produced in the economy in
a given year. Net Domestic Product is GDP minus the depreciation on the nation’s capital
products. National Income is defined as the total value that all newly produced commodities

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and services add to the national product of a country in a given year. Personal income is
defined as the total compensation of individuals in the form of employment earnings,
investment income and transfer payments (Carvalho & Rezai, 2015). Disposable income is
personal income minus taxes.

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References:
Human Development Reports. 2019. Hdr.Undp.Org.
http://hdr.undp.org/en/countries/profiles/USA.
Pomerleau, K., & Potosky, E. (2014). Corporate Income Tax Rates around the World,
2014. Tax Foundation. Fiscal Fact, (436).
U.S. Data And Statistics | Usagov. 2019. Usa.Gov. https://www.usa.gov/statistics.
Carvalho, L., & Rezai, A. (2015). Personal income inequality and aggregate
demand. Cambridge Journal of Economics, 40(2), 491-505.