Custom «The Economic Condition of America» Sample Essay
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The national economic conditions are primarily determined by particular parameters. In the book Macro-Economics, Wells and Krugman state that the country’s economy is gauged through the GDP, inflation, and employment. As such, this paper analyzes the America’s economy in line with the aforementioned authors’ analysis of the nominal GDP of the contry, rate of unemployment, and inflation index.
By a large margin, America has the leading single-state economy in the world. In 2013, the nation’s GDP (about $17 trillion) constituted a quarter of the world’s GDP. Moreover, its per capita GDP is the seventh leading globally. The key contributors to this performing economy are high parity of purchasing capacity, stable rate of the GDP growth, average rates of unemployment, extensive research, and high levels of investment (BLS).
The economic index is also boosted by the state-of-art infrastructure, large scale production, and natural resources. According to the latest rankings of 2014, the United States is the 12th best free economy in the world. Actually, the America’s economy is a mixed one. The major business partners of the United States are Germany, Mexico, Japan, Canada, and China. The later, however, is the only country above the US in world trading (BLS).
America is the third country in the world oil production and the leading producer of natural gas. In 2010, the US became the leading manufacturer in the world; while it remains the head quarter of world’s 132 of 500 largest manufacturing companies. Additionally, it has the largest market for stock exchange (BLS).
Wells and Krugman reckon that both the real and nominal GDP are one of the critical factors that analyze the current conditions of any country’s economy. They state that the GDP is the total sum value of products and services manufactured by the country in one year. According to them, this is the most important feature of the country’s economy (Krugman & Wells, 291).
The book outlines that both the real and nominal GDP is used for the management of the macroeconomic activities of the country such as accounts of the country. For example, the US GDP for the 2013 financial year was estimated to be about $17 trillion. This figure represents the value of services and products that were in the American markets in that year (BEA).
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The authors also state that the value of products and services consumed by the citizens of a country in a year constitutes the per capita GDP. As such, the US per capita GDP represents the value of commodities and services consumed by Americans in a year. Krugman and Wells also add that per capita is used to determine the living standards of the people in the country (BEA).
Given that the US has the seventh leading GDP per capita implies that Americans’ lifestyles are the seventh best across the globe. These two parameters are widely used in gauging the economic performance of the country. However, the disparities between the GDP and per capita GDP of the US show that the two are not entirely dependent (BEA).
Wells and Krugman point out that inflation also shapes the country’s economy. The rate of inflation directly dictates the prices for products and services consumed by the citizens of that country. Not only does it affect the purchasing power of the state, but also dictates the overall value of the GDP (Krugman & Wells, 306).
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In March 2014, the inflation rate in the US was 1.5%. This value is calculated by the price index of consumable goods produced by the country in a month. The inflation rate affects the GDP in two ways. The high rate of inflation increases the price indices of consumable goods. The increase affects the purchasing power of the country, which leads to a fall of the GDP (US Inflation).
Here, the economic performance shrinks. The decrease in the rates of inflation lowers the price indices for consumable products. Here, the purchasing power shoots up, which boosts the national GDP. Consequently, the economic performance of the country improves (America Inflation).
According to Krugman and Wells, unemployment acutely affects the performance of the national economy. It directly influences the spending rate of the state, thereby affecting the GDP (Krugman & Wells, 403). In the US, unemployment cases have astutely risen since the turn of the millennium. In 2008, the country lost nearly ten millions jobs due to the crisis of the global economy (Thomas E. Perez).
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Limitations and Biases
America’s economy faces many limitations. For example, the economy score is half a point shy of the last year’s 76% due to shortfalls in freedom of business, fiscal policies, and rights to own and use property. History reveals that the American economy has consistently fluctuated over the last two decades (BLS).
Till 2006, the economy steadily rose to the upper echelons of the leading free economies of the world. After then, that rise has been substituted by a gradual decline due to huge losses in wealth rights, corruption, and uncontrolled spending by the state. These factors have culminated to huge losses since 2007, making America the only free-economy state to annual economic losses in those years (BLS).
Other Economic Factors
The America’s economy is also shaped by other factors besides the aforementioned ones. For example, the country constitutes of several working classes with different wage structures. These inequalities in incomes dictate the level of investment, which also contributes to the national GDP. In addition, there are favorable environmental factors that provide abundant natural resources for production. These factors do not only boost the economic performance of the nation, but also improve the living standards of Americans.
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