Economic Indicators Paper - Essay Example

forms at a level below full employment then monetary and fiscal policy renders a positive impact by increasing employment rather than simply causing inflation or directing the resources towards inefficient use in order to create jobs. Th paper studies the automobile industry with the help of the six economic indicators – real GDP, Unemployment rate, Inflation rate measured by the Consumer Price Index (CPI), Auto Sales, Foreign Exchange Rate and Oil and Fuel Prices. The study focusses essentially on the inflation rate which in turn affects the other indicators as well as the industry and a whole.

Real GDP: This is the measure of the total output produced during a specific time period within a certain territory. This is measured at constant prices in order to adjust for the inflation rate. This helps in estimaitng the size of the economy with ajdustment in prices and inflation rates. Unemployment rate: We consider the status of unemployment for a particular individual when he or she is eager to work but is without work. The percentage of the potential labor force who are unemployment is estimated as the unemployment rate.

Unemployment is often related to the recessionary phase of an economy or a business cycle. As production falls during recession, in order to cut he cost, labour is retrenched and a sudden unemployment might arise. Inflation rate: This refers to the rate of increase in a certain price index. Usually Consumer Price Index is used to reflect inflation. This is defined as the percentage change in price. level over a certain time period. Conversely, inflation rate is also the decrease in purchasing power of money.

With increase in prices purchasing power falls, money supply in the economy rises while the supply or production falls. The automobile industry played an important role in the 1920s when the US economy grew at an accelerated rate creating more and more jobs and income. In the late 1980s, with the increase in competition with the foreign