Macroeconomic Analysis Research Paper
The entire field economics depends upon two different types of variables which are macroeconomic variables and microeconomics variables. As clear by the name, microeconomics is the type of economics in which the information related to the economic well being of a single person is known as microeconomics, while the economics that specifically associated with the economy as a whole usually referred as macroeconomics (Seavoy, 2003). Both of these types are essential for the readers and researchers. In this assignment, it is required to give recommendations to Rick, a friend who is willing to advance their company of auto parts within the region of the United States (Seavoy, 2006).
Macroeconomic variables are required to consider for the same analysis that include Gross Domestic Product rate (GDP) rate, Interest rate, level of unemployment, the business cycle, fiscal policy, monetary policy and international trade along with analysing it after consider it effective for Rick.
Discussion & Analysis
Recommending Ray regarding the effectiveness of their business in the region of the U.S. is the core perspective of this assignment, and all the macroeconomic variables and conditions depicted above should be consider to analyse everything accordingly.
Gross Domestic Product (GDP) Growth rate
Theoretically, Gross Domestic Products (GDP) is the total provision of products that manufactured in a given economy. It is an important measure of the performance of a company timely. The GDP Growth rate of the United States from the last six years is as follows (Tradingeconomics.com, 2015)
The aforementioned table and graph, it is very clear that the GDP growth rate of country which decreased drastically during the current economic downturn resilient effectively from the year 2010 to 2014. From the year 2010 to 2014 the GDP growth rate of the country was somewhat stable, showing the government of the country stabilized its economy perfectly (Tradingeconomics.com, 2015). The average GDP growth rate of the United States in these six years is 0.71% which is not very powerful; however it lies in the positive node.
The Business Cycle, Unemployment and Inflation rate
An effective business cycle is extremely important for a business to expand and flourish in a market. New organizations work hard to research the level of efficacy of new markets before entering in it. United States is indeed the largest markets of almost all the products. Both manufacturing and service sectors in the country are enhancing their values incredibly. United States has a Health and Development Index (HDI) of 0.914 which is extremely high, showing that the country allocated high amount of funds over the health and development of their citizens and the business operations within the country (Tradingeconomics.com, 2015). Experiencing ups and downs within the business cycle is common for a country, and the U.S. had also experienced the same. During the current economic downturn, the confidence of the investors were little bit shaky from the business operations of the country, however it again have an edge. The economy of the United States has completed the mandatory economic cycle recently from which they leapt out from a severe economic crisis. Therefore, everything is now in the favour of the country, and Rick has to get this information comprehensively. Rick is able to enter and then have a definite market share in the auto industry because of the current business cycle and situation of the country.
The rate that used to analyse the entire level of unemployment is known as Unemployment Rate. A country with low unemployment rate is known as economically sound country of the world, and it is equally applicable and effective for the economies (Tradingeconomics.com, 2015). The unemployment rate of the United States is important here to analyse in order to get an idea about the employment market of the country.
The aforementioned table and graph is clearly depicting that the government of the United States (US) were unable to maintain strong significance in the management of its unemployment rate. It is clearly seen that the rate of unemployment of the United States were very high from the 2009 to 2012 due to the intensity of the current economic crisis. The rate of unemployment of the United States (US) is 7.44% which is showing that the out of 100 people, almost 8 people are unemployed in the country. By considering this scenario, Rick is able to find the most effective professionals for its services because of the high unemployment rate, however high unemployment rate is also a guarantee that the propensity to consume a product is not powerful within this region.
International Foreign Investment
Foreign Direct Investment is one of the most important macroeconomic indicators that consider by a country to maintain its significance in the market (Tradingeconomics.com, 2015). The foreign direct investment stance of the U.S. is as follows
Fiscal Policy and Unemployment
The policy that exclusively uses to manage the rate of taxation either on the individual or on the corporations is known as a Fiscal Policy. A powerful fiscal policy is very important for the sake of a country. The fiscal policy of the United States is very strong and powerful (Usinflationcalculator.com, 2015). The relationship among the fiscal policy and unemployment is not very high within the country. Corporations are expected to give a tax of 30% on their entire earnings once in a year. In return, the think tanks and policy makers of the United States provides all type of security to them to manage their operations in this particular market. It will be an effective sign for Rick to register their business in the market to flourish accordingly. However, Rick has to comply with the Fiscal Policy of the country in order to prolong their existence in the market.
Monetary Policy and Interest Rate
United States is one of those countries of who took major initiatives to strengthen the economy after the current economic slump. The monetary policy stance (MPS) of the country is powerful, and with each successive year, the country maintained its significance and effectiveness. The United States of America (USA) has maintained their interest rate to a level of 0.25% from the financial year 2008 to 2015 in order to increase the level of borrowings. The stance was taken into consideration to increase the momentum of bank’s earning. The cost of borrowing the funds for the business will be very low for Rick, and this particular thing lies in the favour of the individual as far as expanding the market is concerned (Usinflationcalculator.com, 2015).
The Rate that used by the companies and individuals used to borrow the funds from the banks is known as Interest Rate. After the current economic crisis, the central bank of the United States maintained the prevailing interest rate within the country to increase the level of borrowings within the country, as it will lead to increase the economic situation of the financial institutions. This particular variable is in the favour of Rick in terms of establishing their business in the United States.
In terms of demographics, the United States is a mix county in which people belong to different race, religion and ethics live and work together. The country did a fantastic job to diminish the level of diversity and other racism based problems from the country in order to maintain significance in the market.
Rick has to maintain the same significance within their business operations and has to promote the innovation without any type of discrimination. Rick has to apply a diverse environment to the business in order to get appreciation.
Conclusion and Recommendations
After analysing the entire market of the United States through powerful and sophisticated macroeconomic indicators, it is to advise or recommended to Rick to expand their auto parts operations in the United States, as it will certainly be a perfect choice for them in the future as far as increasing and directing their performance accordingly in the market.
Seavoy, R. (2003). Origins and growth of the global economy. Westport, Conn.: Praeger.
Seavoy, R. (2006). An economic history of the United States. New York: Routledge.
Tradingeconomics.com,. (2015). United States Foreign Direct Investment | 1994-2015 | Data | Chart. Retrieved 9 February 2015, from http://www.tradingeconomics.com/united-states/foreign-direct-investment
Tradingeconomics.com,. (2015). United States Unemployment Rate | 1948-2015 | Data | Chart | Calendar. Retrieved 9 February 2015, from http://www.tradingeconomics.com/united-states/unemployment-rate
Usinflationcalculator.com,. (2015). Current US Inflation Rates: 2004-2015 | US Inflation Calculator. Retrieved 9 February 2015, from http://www.usinflationcalculator.com/inflation/current-inflation-rates/
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