Economic Indicators

The data will be used to advise a IIS- based multinational company that manufactures and sells its products in a number of other countries. Methods of analysis will include the extensive analysis of valid secondary economic data, regarding economic indicators ranging from GAP to population size. Economic indicators are various strands of data that provide knowledge and information on how global economy is operating.

An economist might use economic indicators as compass to direct themselves, and to predict future economic outcomes. Macroeconomics’s is the study of economic indicators, these indicators show economist how well the economy is operating by revealing the present state of a region in terms of the production and consumption of goods and services and the supply of money. There are a whole array of economic indicators, I will touch on a few and discuss the factors that influence them. (Taylor & Manama 2014, up. 438 ;458).

In this book the authors suggest that GAP can be used to assess a market’s productivity. Gross domestic product is the monetary value of all finished products and services, created within a particular country. GAP also includes public and private government spending. It also includes the value of exports minus imports. GAP is an example of an economic indicator, which is used to gauge the economic well- being of a country. Therefore giving economist insight on a nation’s living standards and level of productivity.

Under the expenditure approach, GAP can be calculated as the addition of consumption, investments, government spending and net imports. Consequently, any changes to the elements within the above equation will result in the change in GAP. The level of economic activity within the economy is determined by the amount of input entering the economic system, and the way in which things are transported and transformed. Consequently, any changes to the elements within the above equation will result in the change in GAP. Consequently, global trade would affect a nations GAP.

The bigger the export activity, the more productive native firms are. When export activity rises unemployment level also tend to decrease, thus increasing disposable income of the general population, which will inevitably result in increased spending. The following activities is likely to drive GAP within that region, signaling economic growth. In addition, large projects that involve the transformation of countries infrastructure and military, result in a substantial amount of capital changing hands. Therefore, one could argue that government’s fiscal policies have the power to alter a nations GAP.

I’ve illustrated the upward trend of Austria GAP. This shows the increase in economic activity within Austria On an annual basis by 32% between the years 2000-2014. The level of economic growth is influenced by a large number of factors. For example, a well-educated highly skilled work force can generate economic growth. By tapping into this rich pool, the US based manufacturing organization will see a substantial increase in economies of scale. The workforce will most likely be more efficient and productive.

As more capital flows through the circular flow of income, house hold income will increase, which in turn will lead to high retail sales as demand increases for elastic normal/luxury goods. This will enable the organization to generate Geiger profits, which will result in the increased happiness of shareholders. This in turn will aid in the attraction Of more investors to pump more capital within the organizations, thus allowing them to expand further in attempt to increase capacity utilization On the other hand, Austria GAP growth is not as big when compared against several emerging markets, therefore it does warrant immediate investment.

China has the potential to become one of the most economically powerful nation in the world as it has access to vast numbers of employees in their labor pool. China’s population now exceeds the one billion mark, and now institutes 22% of the world’s population. In fact, China’s GAP is more than double that of Australia’s. China’s GAP per capita % growth between the years 2010 – 2014 is at 7. 1 %, Australia’s GAP per capita % growth regressed at the rate Of -0. 2% with the same time frame. China exceptional economic growth, suggests that the organization should be focusing more on their market which is earmarked to surpass the US.

Therefore, it could be argued that the organization business strategies are better suited for a more lucrative environment. Rapid expansion, will be easier within a period of economic Roth, as firms coming in won’t have to gain sales automatically from their rivals. Therefore, it can be said that focusing on nation with appreciating economic growth and increased wealth, will best suit the organizations corporate objective that is profit mastication. The annual percentage change in a ICP is used as a measure of inflation. The ICP is a measure of the price fluctuation of representative items and services bought by the average consumer.

Each month in Europe Rheostat calculate and report the ICP within their region. The process of calculating ICP is fairly easy. Consumer spending is tracked, once the data is gathered the common items and services purchased by consumers, will be placed within the fixed basket. The price for each good and service will be tracked, thus allowing the researcher to contrast the prices at different point in his chosen time line, they will then calculate the cost of the fixed basket for each time period. A base year is chosen and the index is calculated.

When the price for goods and service rises, each Euro buys fewer goods and services. Therefore, inflation indicates a reduction in the purchasing power of a particular currency. Consequently, with this new found knowledge one can understand the factors that play a part in the rise and fall of inflation. For instance, cost push inflation. The increase in costs of firms, may result in the increase in inflation. For example, an increase in wages will result in an increase in fixed costs for firms, therefore in attempt sustain their profitability an organization may seek to increase the price of their goods and services.