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Indicators - Essay Example

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The current rate of unemployment is 7% which is higher than what is considered as the natural rate of 3 to 4%.The policies to address this economic challenge can either be monetary or…
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Download file to see previous pages... This cuts costs for businesses which would enable them to reinvest the spare cans and hire more workers.
There are also other ways that should be considered to address the problem of unemployment. These include training programs that are better than those in the past. This will ensure that the skills of employees are better matched to the jobs that are newly available.
The full-time employment policies should also push for full-time employment a bit faster. This is because when labor markets grow tight, companies go ahead and hire any individual even those who have been unemployed for a time greater than one year.
The gross domestic product is defined as the output of the final goods and services that are produced by a country. The GDP is calculated as Personal Consumption Expenditure plus Investment plus Government Expenditure plus (Exports minus Imports)
The advantage of using real GDP is that it is dynamic because it changes with the constantly new figures. It is the best indicator of the overall economic health of a nation. The past figures show that GDP has increased since the last quarter and has been showing an increasing trend for the past two years.
GDP is used as a coincident indicator as it changes at the same time the economy does. A negative economic growth for two quarters that are consecutive is considered a recession and the Federal Reserve usually lower the interest rates in this period in order to increase the rate at which the economy is growing and to stimulate the economy. Real GDP takes into account inflation as we multiply the nominal GDP with a deflator. GDP tells us if the economy is growing more quickly or slower than past years. The US sustainable rate as believed by economists is between 2.5% and 3 % as that has been the average rate in the past.
The five components of GDP as cited above are private consumption, government consumption, investment and net exports. The ...Download file to see next pagesRead More
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