Informative Analysis Of The Global Market

863 Words 4 Pages
The Global Economy is an enormous place. Billions of dollars are being transferred every second. When an organization makes the decision to go global, a critical and informative analysis of this vast economy must be conducted to ensure the project is feasible and profitable. To safeguard their investments, companies use economic indicators to conduct a thorough examination of the global market. Economic indicators, by definition, are key statistics that indicate the direction of the economy. There are three key types: leading indicators, coincident indicators and lagging indicators (businessdictionary.com, 2015). This data is then used to measure the strength of the economy. Several key indicators that will be discussed are as follows: …show more content…
GDP is “the dollar value of all goods and services produced by a given country during a certain period” (Graham, 2015, P. 10). GDP is calculated is calculated as follows: GDP = private consumption + gross investment + government investment + government spending + (exports – imports) (boundless.com, 2015). There are two different types of GDP: real GDP and nominal GDP; nominal GDP does not take into account inflation. The GDP is calculated and released every business quarter by the Bureau of Economic Analysis (BEA), which is a part of the Department of Commerce. This information is used to determine the strength of a country’s economy. Rapid growth rate usually indicates inflation, while a slow or negative rate usually leads to concerns of a …show more content…
Inflation is an increase in the price you pay for goods, but can also be seen as a decline in the purchasing power of money. There are two sides of inflation “price inflation and monetary inflation (McMahon, 2010). Price inflation is when prices rise or it takes more money to purchase the same item as before. Monetary inflation is an increase in the supply of money. When the supply of money increases, currency loses its purchasing power and services and goods increase. The Consumer Price Index (CPI) and the Producer Price Indexes (PPI) are two ways to measure inflation and can be found at the Bureau of Labor Statistics website (bls.gov,

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