Identify three macroeconomic variables 1. Gross Domestic Product (GDP): The GDP is the total value of goods and services produced in a country in a…
Identify three macroeconomic variables
1. Gross Domestic Product (GDP): The GDP is the total value of goods and services produced in a country in a given year. GDP determines the economic growth and its sustainable increase in the total goods and services produced over time (Thomson Gale, 2008).
2. The Unemployment Rate: Unemployment rate, is another key macroeconomic variable and an indicator of the condition of the labor market. Unemployment rate is the percentage of people willing to and actively looking be employed at the usual wage rate, yet unable to find job opportunities. When the unemployment rate is high, it is hard to find and also difficult to get wage increases or promotions for people already in the work force. A low unemployment rate indicates of good economic performance (Thomson, 2008).
3. The Inflation Rate: This is generalized increase in the overall level of prices measured by the consumer price index. It determines the value of money changes over time. When the inflation rate is high, the real value of money is reduced. People on fixed incomes, such as pensioners cannot keep up with the resulting increase in the cost of living (Thomson, 2008).
Interpret the trends of the three selected macroeconomic variables for the past three years
For the Unemployment rate, the United states has actually done well. The US department of Labor, (n.d). reports that unemployment rates continue to trend down from 8.1 in 2012 to 7.4 in 2013 to 6.2 in 2014 and 5.3 in 2014. This means that more Americans have been able to find job at a usual pay rate over the years. It is an indicator that the US economy is doing better in 2015 compared to the previous years.
US annual GDP reflects Jun 30, 2016 16.58 trillion, Dec 31, 2015 16.49 trillion and Dec 31, 2014 16.19 trillion respectively. In analyzing the numbers, just like the unemployment rate, one would conclude that the US economy is getting better (Multil.com, 2015).
The average annual inflation rate for the US ranges from 0.1 in 2015, 1.6 in 2014 and 1.5 in 2013. Generally, the US economy is doing much better comparing 2014 to 2015 (US Inflation Calculator, n.d).
As indicated by the data provided, the US economy is doing better. The unemployment rate is low, inflation rate is low and the GDP is growing indicating a striving economy. Expects explained that when variables of macroeconomic indicate a stronger economy system consumers are more likely to spend and production is more likely to improve (Thomson, 2008).
In evaluating the trends to the macroeconomic variables discussed above, the impact of supply and demand would be beneficial to both the consumer and the producers as there is circulating money in the economy. Suppliers would be willing and ready to increase production and will be confident that consumers are ready and willing to spend. Both demand and supply will increase accordingly.
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