Economics Analysis

Economics Analysis

Introduction

This paper intends to explore the current economic indicators of a country. For this purpose, I have chosen the country China. The main focus of this paper is to analyze the economic wellbeing of the country based on the given economic indicators. The country has successfully lifted approximately four hundred million people out of poverty in only the past few decades. In doing so, China has become the fourth largest economy. However, to have in depth analyses its core economic indicators are explored and compared with the 3 major US economic indicators.

Discussion

Gross Domestic Product

The gross domestic product (GDP) is very significant economic indicator, which is used to analyze the current conditions and growth of the country's economy. GDP corresponds to the total value assigned to goods and services that are produced in a given period of time. It is very difficult to measure gross domestic product. However, there are 2 ways to calculate GDP. One of the ways to measure is by adding all the funds spent by the people in a given year in a country, while another way is to add up all the funds that are earned by the people in a given year in that country, which is also known as income approach.

In addition to this, gross domestic Product per capita means that GDP per person living in the country. This can be calculated by dividing GDP by number of people in the country. Overall GDP represents development and growth of economy and economic production in a given year. Inflation and Unemployment

Continuous increase in prices without increase in the production level of goods in the country is known as inflation.

Effects of Inflation

When inflation prevails in any economy then it is understood that prices of goods are likely to increase overtime, thus consumers prefer to buy goods and services sooner rather than later. Here inflation is dependent variable and unemployment is the independent variable. Unemployment rises due to certain factors which would be affected on both inflation and unemployment.

At present our economic philosophy is that, it does not matter what inflation rate is prevailing in the economy, however, the significant element to focus here is that the inflation rate must remain constant, and that monetary policy will therefore be creditable. Any volatility in prices is likely to ultimately result in greater inefficiency and consequently higher unemployment.

Economic Indicators of China (Refer to Appendix)

China has come out of nowhere. ...