Respond to the following in a minimum of 175 words:
GDP is a strong measure of the health of the economy, and it’s among the most important and widely reported economic data.
In your own words, summarize nominal GDP.
Locate an online news article that discusses impacts to GDP in some way. Summarize the article and explain its relation to/impact on GDP.
Cite your sources.
respond to two classmates
1st response – The Nominal GDP refers to the total market value of every finalized good and the services produced inside a country throughout a specific period, in most cases calculated annually or quarterly without adjusting for inflation. It reflects current prices, offering insight into economic activity and production levels. However, it may be influenced by price-level fluctuations rather than solely reflecting actual growth or productivity.
However, the impact of the Federal Reserve’s decision to increase interest rates on the U.S. economy is discussed. These rate hikes are being implemented to counter high inflation rates, resulting in a slowdown in consumer spending and business investment. Consequently, the GDP growth rate has been affected, with recent quarters showing a deceleration in economic expansion. While these rate hikes and aim to stabilize prices, the immediate consequence often involves a decline in economic activity, as evident in the nominal GDP figures.
The relationship between interest rates and GDP is crucial. The Federal Reserve aims to control inflation by increasing interest rates, restricting the money supply, and curbing excessive spending. This action can elevate borrowing costs for consumers and businesses, potentially impeding economic growth. As spending and investment levels decrease, the overall production of goods and services within the system slows, reducing GDP growth. Therefore, the adjustments in monetary policy directly impact economic output and the economy’s overall health.
2nd response –
