Question

Outline the dimensions used to describe the economy and their indicators.

(International Business Chapter 7 Economic and Socioeconomic Forces LO7-4)

Be specific Please around 250 words

Answer 1

Solution:

The dimensions which are used to describe the economy and their indicators are very often the same for all the economies. The best indicator of the economic growth is the GDP which is gross domestic product indicating the health of the economy of the country. This measure the amount of expenditure/income which has been made in the regional boundaries of the country. This includes a contribution from the residents of the country in the region including foreign nationals as well.

The second indicator which is generally used is the GNP which calculates the income earned by the nationals of that particular country regardless of where they are currently residing. GNP is a metric which is preferred next to GDP. Another important dimension of any economy is the employment and unemployment percentage. The higher unemployment means the economic wheels of the country are moving slowly. Employment hence plays a very important role in any economy and almost every economy is after making this ration of employment as high as possible and to make sure the residents of the country are employed and this automatically makes the GDP of the country increase since there is a higher number of people earning the income now.

Another dimension of the economy is the productivity and spending powers of the nationals of the country. More the spending power indicates a higher disposable income of the people which means higher income earned and hence a strong economy in the making. when the economy is doing poorly the people earn less and automatically the disposable income of the people goes down hence indicating an economic slowdown.

Hence, above are the dimensions of the economy and the parameters on which the strength of the economy is judged.