5 most important economic variables
(1) GDP
(2) Interest rate
(3) Personal income and consumption
(4) Debt
(5) Inflation
【GDP】The gross domestic product (GDP) is one of the most important indicators to evaluate the condition of a country 's economy. It represents the total dollar value of all goods and services produced over a specific time period; thus the size GDP would also indicate the size of the economy of the country.
Normally, GDP is used to compare with the previous quarter or year’s number and it can present how fast the economy has grown or shrunk. For example, if the year-to-year GPD has grown by 5%, it means that the size of the economy has grown by 5%. Since the way of calculating GDP is the same from country to country, GDP …show more content…
Interest rates influence many perspective of people’s daily life, it’s correlated to the cost of borrowing, the return on savings, as well as returns of many investments. Interest rates affect consumer spending, thus affect the over all GDP. The higher the rate, the higher people need to pay for their loans and less they could spend on credit. Interest rates also affect inflation as well. If the interest rate goes up, the borrowing will be more difficult, thus there will be less money in the market and the inflation will no go up so fast. So interest rates are used by the central banks to control inflation. For most of the developed counties, interest rates are normally kept to control the inflation and to keep the economy in a heathy condition. In conclusion, interest rates affect all perspectives of financial market and then the whole macro economy …show more content…
If the inflation is expected, then people can can adjust their economic activities according to the inflation. If the inflation is unexpected, there will be problems arise. From a country’s perspective, if a country’s inflation rate is higher than that of other countries, its products will cost more to export and it will hurt the GDP.
Inflation is a sigh that a country’s economy is growing. The lack of inflation is not necessary good since it means the economy is not expanding. While excessive inflation and hyperinflation have negative economic effects, deflation can be as bad or even worse. So there’s no definite saying that inflation is good or bad, it’s more depend on the overall economy.
【Current US economy analysis】According to the Bureau of Economic Analysis, the real GDP of US increased at an annual rate of 2% in the third quarter of 2015, and Bureau of Economic Analysis estimate that the increase in the forth quarter will be 1%. The increase in real GDP in the forth quarter comes from personal consumptions expenditures, residential fixed investment, and federal government
(1) GDP
(2) Interest rate
(3) Personal income and consumption
(4) Debt
(5) Inflation
【GDP】The gross domestic product (GDP) is one of the most important indicators to evaluate the condition of a country 's economy. It represents the total dollar value of all goods and services produced over a specific time period; thus the size GDP would also indicate the size of the economy of the country.
Normally, GDP is used to compare with the previous quarter or year’s number and it can present how fast the economy has grown or shrunk. For example, if the year-to-year GPD has grown by 5%, it means that the size of the economy has grown by 5%. Since the way of calculating GDP is the same from country to country, GDP …show more content…
Interest rates influence many perspective of people’s daily life, it’s correlated to the cost of borrowing, the return on savings, as well as returns of many investments. Interest rates affect consumer spending, thus affect the over all GDP. The higher the rate, the higher people need to pay for their loans and less they could spend on credit. Interest rates also affect inflation as well. If the interest rate goes up, the borrowing will be more difficult, thus there will be less money in the market and the inflation will no go up so fast. So interest rates are used by the central banks to control inflation. For most of the developed counties, interest rates are normally kept to control the inflation and to keep the economy in a heathy condition. In conclusion, interest rates affect all perspectives of financial market and then the whole macro economy …show more content…
If the inflation is expected, then people can can adjust their economic activities according to the inflation. If the inflation is unexpected, there will be problems arise. From a country’s perspective, if a country’s inflation rate is higher than that of other countries, its products will cost more to export and it will hurt the GDP.
Inflation is a sigh that a country’s economy is growing. The lack of inflation is not necessary good since it means the economy is not expanding. While excessive inflation and hyperinflation have negative economic effects, deflation can be as bad or even worse. So there’s no definite saying that inflation is good or bad, it’s more depend on the overall economy.
【Current US economy analysis】According to the Bureau of Economic Analysis, the real GDP of US increased at an annual rate of 2% in the third quarter of 2015, and Bureau of Economic Analysis estimate that the increase in the forth quarter will be 1%. The increase in real GDP in the forth quarter comes from personal consumptions expenditures, residential fixed investment, and federal government