State of the Macroeconomics - Essay Example

No Question One of the macroeconomics in terms of the business cycle for the period from 2003 to 2005 According to the data provided, there seems to be a variation of figures from GDP, Rate of inflation and unemployment between 2003 and 2005. The period of rapid economic growth occurs in 2003 with a growth rate of 6.0%.The upward increase was registered as compared to the previous year. The business cyclic movement pattern in terms of economic activities is undertaken. The year 2003 is significant because it brings a change in the pattern of the cycle which we can refer to as stagnation point (Owyang, pp. 604-616). The economic cycles according to the data can be categorized into: a) Expansion phase- Characterized by increase in production scale and overall price, minimum interest rates b) Crisis phase-Characterized by a decline in financial position of a nation c) Recession phase-Characterized by fluctuation in prices and output, maximization of interest rates d) Recovery phase- Because of change in prices and income of individuals, there is recovery of the stock. The investment level brings the height of variation in output of the economy. When the economy is at maximum employment level, workers are capable of demanding increase in wages (Owyang, pp. 604-616). Question Two Unemployment Situation In The U.S The current US economy is encouraging with more jobs created. The recent statistics shows that 295,000 job opportunities were added by February this year. It was against the prediction by many economists who estimated approximately 235,000 job increase. There is a decline of five point five percent unemployment rate in US marking the least figure since 2008. There is an improvement compared to the past year that stood at 6.7%. The unemployment figure can be used to locate the state of the economy of US in the business cycle. Considering that there is a steady decline, it is true to say US is undergoing recovery after the past crisis they experienced (Khasnabis, pp.16-25). Last month’s figures were disappointing where there was an addition of 126,000 job opportunities in US. It is an indication that market labor is ultimately tripped up by a wider slowdown in the economy. Going to the business cycle it can be focused that the economy will hit the expansion phase (Khasnabis, pp.16-25). The labor market is recovering from the past experiences. The following conditions are applicable to the case of US economy to achieve expansion phase mentioned above a) High-skilled personnel should be hired to ensure proper work efficiency b) Full-time employments should be encouraged to enable high production output c) Workers should be given high wage to boost their self-esteem and to ensure quality work d) Private-Sector employments should be initiated since it is the primary source of employment creation (Khasnabis, pp.16-25). Question Three Analysis of India’s Economy India has gone through rapid growth since the opening up of its economy in 1991. Policies of privatization were introduced making ten percent of the people come out poverty clutch. Currently, there is hope for the nation since they have registered some economic improvement. The analysis gives the position of India compared to other poor countries for a better understanding of the changes in the economy (Khasnabis, pp.16-25). India is a weak nation. There are various measures to be used including the provided data. It can be defined in terms of per capita expenditure of calorie intake by an individual and pay back the cost of survival. Benchmarking on the statistics provided, purchasing power variability is key in determining the poverty level. Data indicates that the total GDP in terms of power to purchase is $7,277 putting it among the top nations. (Khasnabis, pp.16-25). The government provided a population of 29.8% of persons living below the poverty line by 2010. It is an indication that the level of unemployment is high taking into account the overall population (Khasnabis, pp.16-25). Economic measures methodology of determining an individual income also is an evidence of high level of poverty. The family income distribution index is slightly high recording 36.8 by 2004. There is no such comparison in the world making the economist conclude that indeed it is a weak nation (Khasnabis, pp.16-25). India is performing more or less like other poor countries. A good example of similar countries to be compared with is China with a high rate of unemployment. Natural resource endowment by a government plays a significant role in development. However, it has been observed in a few isolated countries like India where the funds have contributed negatively to the economy. The potential challenges posted by the resources are quite many. There is conflict brought by the resources, and some incentives are taken elsewhere to support development. Resources have led to increasing in corruption cases within the nation making the overall income to be low compared to other countries (Khasnabis, pp.16-25). India‘s economy is affected politically. There is political instability that paralyzes the transition of the economy. Systems should be put to combat the challenges. A coordinated system that ensures multi-party politics is missing in India. Currently, there are efforts put that has provided the transition from a socialist state to that of liberty. They have shifted to open economy after the past financial crisis realized which has placed it in ahead of other nations like China (Khasnabis, pp.16-25). Question four Analysis of National Income Accounting Metrics As GDP As Measures Of Social Well-Being Gross domestic product is criticized to fall below the mark of measuring the social well being. Such imperfections have been discussed as follows; (a) It does not capture full information of what is intended to analyze about the human well-being. (b) It records positive ideas of certain activities that are dangerous to the social welfare. (c) It measures gains in economy of a given nation but does not reflect the retention capacity in that country. (d) It does not take into account the benefits distribution with its emphasis on increasing per capita income (Fleurbaey, pp.1029-1075). However, GDP in many instances is used to measure the performance of the economy in a specific country. It can also measure the relative share of a given economic sector. The possibility exists since GDP measures quantity or value of goods as opposed to sales. My preference is that nation with high GDP growth rate because it is associated with development (Fleurbaey, pp.1029-1075). Work cited Fleurbaey, Marc [2009], Beyond GDP: The Quest for a Measure of Social Welfare, Journal of Economic Literature 47, 1029-1075. Khasnabis, R. "Unemployment and Poverty in India." Globalization and Problem of Unemployment in India (2005): 16-25. Owyang, Michael T., Jeremy Piger, and Howard J. Wall. "Business cycle phases in US states." Review of Economics and Statistics 87.4 (2005): 604-616. Read More