Preview

Project Assignment

Good Essays
Open Document
Open Document
964 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Project Assignment
October 5, 2010
EC 351
Project Assignment #1

1. The topic I chose for my project is “What effect does the inflation rate have on the gross domestic product (GDP) of the United States of America?” I would like to study the relationship between the inflation rate and the GDP and decide whether or not the GDP mimics the inflation rate. 2. This topic is interesting and important because it affects the monetary policy of the United States of America. The inflation rate affects everything from wages to the price of a cheeseburger. The GDP is the measure of a country’s economic output. How the inflation rate affects the GDP has a significant impact on the United States’ economy. GDP and standard of living are positively correlated …show more content…
The source for the GDP and gross private domestic investment (GPDI) is the Bureau of Economic Analysis’s website, http://www.bea.gov/. In order to get the data on this website I went to the “Gross Domestic Product” link on the home page, then I went to the “GDP and the National Income and Product Account Historical Tables” link on the next page, then I went to the “Frequently Requested NIPA Tables” link, I clicked on the “Table 1.1.5. Gross Domestic Product (A) (Q)” link, then I changed the first year to “2007-A&Q” and the last year to “2009-A&Q”. This will give you both the GDP and GPDI. The source for the inflation rate, unemployment rate, and consumer confidence index (CCI) is http://tradingeconomics.com/. In order to get the data on this website I went to the “Indicators” link on the home page, then I went to the “United States” link on the next page, then I clicked on the “Inflation Rate” link for the inflation rate, the “Jobless Rate” link for the unemployment rate, and the “Consumer Confidence” link for the CCI. Once I was on each of these pages I adjusted the time periods to match my sample. The source for the productivity data came from the Bureau of Labor Statistics’s website, http://www.bls.gov/. In order to get the data on this website I went to the “Productivity” link on the home page, I then went to the “ Labor Productivity” link, then I went to the “Productivity and Costs” link under the word “Archived”, from here I clicked on the PDF …show more content…
I am using time-series data for this project. The GDP is the dependent variable measured in billions of current United States dollars. The inflation rate, unemployment rate, and productivity in the nonfarm business sector are independent variables measured in percent inflation, percent unemployed, and percent change in productivity in the nonfarm business sector respectively. The CCI is an independent variable measured by comparing the average monthly consumer confidence to the base year of 1985 (CCI in 1985=100). The post-Bush variable is an independent, dummy variable. Each variable is continuous and neither cardinal nor ordinal. The post-Bush variable is categorical and the coding scheme to turn it into a dummy variable is a zero for months with Bush in office, and a one for months after the November 2008
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Good Essays

    Eco 372 Week 2
    • 736 Words
    • 3 Pages

    Eco 372 Week 2

    This information influences whether businesses will save or invest, hire or fire, and survive or die. The Nominal GDP is a little different in such that the change in price is not accounted for. Unemployment rate refers to the percentage of the American population that is eligible to work but are current jobless. Inflation rate is the percentage change in the increase of the price of goods and services. Interest rate is defined as the annual percentage divided by the principle balance owed monthly on borrowed money. Economists use gross domestic product, unemployment rate, and interest rates as tools to determine economic trends and predict the future changes in the economy. They try to manipulate the frequency, duration, and extremes of those changes; a never-ending effort to minimize the roller coaster effect. Following is a list of loose definitions for those tools. The gross domestic product is expressed in two terms, real GDP or nominal GDP. The real GDP has been adjusted to account for inflation, and the nominal GDP has not been adjusted. Economists use the Real GDP to show practical relevance and to allow a comparison of apples to apples over time. Household consumption, firm…

    • 736 Words
    • 3 Pages
    Good Essays
    Read More
  • Powerful Essays

    Qrb Working with Numbers and Formulas
    • 1506 Words
    • 7 Pages

    Qrb Working with Numbers and Formulas

    a. If the CPI was 110 last year and is 121 this year, what is this year’s rate of inflation?…

    • 1506 Words
    • 7 Pages
    Powerful Essays
    Read More
  • Better Essays

    Analisys of the Current State of Teh Us Economy
    • 675 Words
    • 3 Pages

    Analisys of the Current State of Teh Us Economy

    That’s right, inflation. In 2008 when unemployment was on the rise, the CPI-U only averaged an increase of 0.1 percent to 215.303. In 2009 and the highest mark of unemployment the CPI-U declined…

    • 675 Words
    • 3 Pages
    Better Essays
    Read More
  • Good Essays

    Eco 372 Week 1 Dq1
    • 1399 Words
    • 6 Pages

    Eco 372 Week 1 Dq1

    There are many factors that affect the real GDP such as interest rates, consumer's confidence in spending and/or asset prices. When it comes to interest rates, the lower the rate the less expensive it is to borrow, which encourages spending. For example, those individuals who have a mortgage to pay will have a lower payment; however, when there is a low to no interest rate, it leaves lenders feeling less confident and unable to grow. Another factor would be the confidence of the buyer; and in my opinion, this is one of the more critical factors affecting the GDP. In order for the economy to grow, the spender and seller must have the confidence to provide and purchase goods. Should either or be unsure it will reduce spending and in turn offer more to the economy. Asset prices, or the rise in housing, is another factor affecting the real GDP that has the potential for creating a positive wealth effect. The wealth effect refers to the increase in spending along with an increase in perceived wealth.…

    • 1399 Words
    • 6 Pages
    Good Essays
    Read More
  • Powerful Essays

    ECON 410 Final Paper
    • 2384 Words
    • 8 Pages

    ECON 410 Final Paper

    The most widely recognized indicator of a recession is the unemployment rate. People are classified as unemployed if they do not have a job, have actively looked for work in the prior four weeks, and are currently available for work. (4, pg. 5) Just prior to December of 2007, the unemployment rate was 5.0%, but by the end of the recession in June of 2009; the unemployment rate was 9.5%. We saw during the recession the unemployment rate peak at 10.0%, this was in October of 2009. This was not the highest unemployment ever reached though. Between September 1982 and June 1983, the unemployment rate peaked at an all time high of 10.8%. Not only was the number of unemployed tremendously high, the proportion of long-term unemployed in the recent recession compared to post-recession periods is notable. The long-term unemployment rate is the number of persons employed for twenty-seven weeks or longer as a percent of the labor force. (4, pg. 5) In 2008, more than…

    • 2384 Words
    • 8 Pages
    Powerful Essays
    Read More
  • Good Essays

    Eco 372 Week 2 Individual Paper
    • 733 Words
    • 3 Pages

    Eco 372 Week 2 Individual Paper

    There are several factors that affect our economy, gross domestic product (GDP), real GDP, nominal GDP, unemployment rate, inflation rate, and interest rates. All of these factors have influences over how we purchase groceries, weather there will be massive layoffs of employees, and decrease in taxes.…

    • 733 Words
    • 3 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Economy: Monetary Policy and Read Ch.
    • 2056 Words
    • 9 Pages

    Economy: Monetary Policy and Read Ch.

    | | | | |Real GDP | | | | |Nominal GDP | | | | |Unemployment rate | | | | |Inflation rate | | | | |Interest rate | | | | | | | | | |Part 2 | | | | | | | | | |Consider the following examples of economic activities: | | | | | | | | | |Purchasing of groceries | | | | |Massive layoff of employees | | | | |Decrease in taxes | | | | | | | | | |Describe how each of these activities affects government, households, and businesses. | | | | |Describe the flow of resources from one entity to another for each activity.…

    • 2056 Words
    • 9 Pages
    Satisfactory Essays
    Read More
  • Better Essays

    Response To Bernanke
    • 1121 Words
    • 5 Pages

    Response To Bernanke

    All economic indicators point to the fact that the United States has been in a recession for at least a year now. The Gross Domestic Product (GDP), the market value of all final goods and services produced within a country in a given period of time (as defined by Gregory Mankiw in his textbook, “Brief Principles of Macroeconomics”) clearly indicates that the U.S. economy has entered a recession. Consistent with the past three recessions in the U.S. (early 80’s, early 90’s, and 2001-2003), the Real GDP’s growth rate has become increasingly volatile over the past five quarters. In fact, per the Bureau of Economic Analysis (BEA), the GDP has contracted in two of the past four quarters. According to the BEA’s Table 1.1.1…

    • 1121 Words
    • 5 Pages
    Better Essays
    Read More
  • Better Essays

    U.S. Economy 2004 - 2005
    • 1321 Words
    • 6 Pages

    U.S. Economy 2004 - 2005

    Gross domestic product (GDP) is the market value for all goods and services produced, also known as economic output, within the U.S. during a specific time period (Mishkin, 2010). The total economic output is typically measured by GDP. The U.S. economy saw robust growth in 2004 and 2005 despite many issues including federal budget deficits, Hurricanes Katrina and Rita, Social Security reform, high oil prices, the looming housing bubble, and the Chinese exchange rate policy. The United States economy grew at an annual rate of 4.4% in 2004 and productivity growth is the key reason for the strong performance (Coughlin, 2005), see Attachment A. Growth in 2005 continued to exceed even the most optimistic projections reaching 4.3% in the fourth quarter.…

    • 1321 Words
    • 6 Pages
    Better Essays
    Read More
  • Satisfactory Essays

    Assess The View That Inflation Is Always Caused By An Increase In Aggregate Demand
    • 715 Words
    • 2 Pages

    Assess The View That Inflation Is Always Caused By An Increase In Aggregate Demand

    Inflation can be caused by an increase in aggregate demand, Aggregate demand is the demand for the gross domestic product (GDP) of a country, and is represented by the formula: Aggregate Demand (AD) = C + I + G + (X-M). An increase in aggregate demand can be caused by many factors such as a decrease in income tax which in turn increase the amount of disposable income people have, which therefore increase consumer spending, higher wages would have the same effect of increasing consumer spending. Also if there were low interest rates then consumers would be less likely to save and more likely to spend which again would increase consumer spending. An increase in the budget deficit would increase government spending which would again increase AD, as well as this if there is a ‘depreciation of the pound sterling’ then there would be an increase in export as there would be cheaper, however there would be a decrease in imports as they would be more expensive therefore increase AD.…

    • 715 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Satisfactory Essays

    Measuring Economic Health Paper
    • 798 Words
    • 4 Pages

    Measuring Economic Health Paper

    The (GDP) is the most importance measure of the total goods and services in the U.S. economy today and it represents the total summary of the world 's best system of economic statistics. The United States government organizes pieces of monthly, quarterly, and annual data from government agencies, corporations, and private citizens into thousand of statistics, such as the consumer price index (CPI), employment reports, corporations and individual tax returns.…

    • 798 Words
    • 4 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Economic Freedom In Australia's Judicial System
    • 774 Words
    • 4 Pages

    Economic Freedom In Australia's Judicial System

    Regressions had tested variables’ relations and had indicated one and two lags of inflation rates which influenced current interest rate and one lag of GDP had influenced power to current interest rate.…

    • 774 Words
    • 4 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Current Economic State in the U.S.
    • 359 Words
    • 2 Pages

    Current Economic State in the U.S.

    The current economy in the United States is expanding slowly. Although the economy has grown it is not growing fast enough to sustain the unemployment rate in America. In the United States you are considered unemployed if you do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work. Persons who were not working and were waiting to be recalled to a job from which they had been temporarily laid off are also included as unemployed. According to the Bureau of labor statistics the current unemployment rate in America is 7.9%. Economic growth slowed down in the middle of the year, and job growth seems to have stabilized at roughly 150,000 jobs a month — just enough to keep the unemployment rate from rising. Current rates on credit cards can range anywhere from 10 % -25 %. For a person like me who has never had a credit card that seems high. The Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. The inflation rate has had an average of 3.36% dating back to 1914 according to Bureau of Labor Statistics. The most recognized measures of Inflation are the Consumer Price Index or CPI which measures consumer prices, and The Gross Domestic Product. The GDP is defined as the market value of all final goods and services produced domestically in a single year and is the single most important measure of economic performance. Presently, the inflation rate in the United States was recorded at 2.00 percent in September of 2012.…

    • 359 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Satisfactory Essays

    MacroEconomics
    • 624 Words
    • 3 Pages

    MacroEconomics

    Although the United States has the leading economy in the world, it was in a recession in 2008, and began to slowly emerge from the financial woes of that time in 2009. The United States, at this time has an unemployment rate of 6.2 percent according to the U.S. Bureau of Labor and Statistics ("Employment Situation," 2014, p. 1), which is a slight decrease from the 6.7 percent rate in March 2014, and a great decrease from the unemployment rate of 10.0 percent in October 2009. This had a direct effect on the inflation rate. In 2004 he inflation rate was 3.3 percent, and reached a high of 4.1 percent in 2007, which is the highest it had been in the previous ten years. As of July 22, 2014 inflation rate was 2.1 percent, which is a vast improvement from the rates listed above, but still not as low as the rate of 0.1 percent in 2008. ("Inflation Rate," 2014, p. 1)…

    • 624 Words
    • 3 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    What Is Gross Domestic Product
    • 856 Words
    • 4 Pages

    What Is Gross Domestic Product

    GDP tells us about our country’s economy by telling us the total money value of all final goods and services that is produced in an economy over a period of time.…

    • 856 Words
    • 4 Pages
    Good Essays
    Read More

Related Topics