Economic Indicators

Topics: Currency, Inflation, Economics Pages: 7 (2131 words) Published: March 7, 2015
ASB-1200 Business Study Skills

Assignment 2: Individual Report (50%)

This report provides an analysis and evaluation of the current and prospective profitability of Austria.  The data will be used to advise a US-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 GDP 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. Macroeconomists 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 & Mankiw 2014, pp.438 -458). In this book the authors suggest that GDP 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. GDP also includes public and private government spending. It also includes the value of exports minus imports. GDP 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, GDP 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 GDP. 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 GDP. Consequently, global trade would affect a nations GDP. 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 GDP within that region, signalling 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 GDP.

I’ve illustrated the upward trend of Austria GDP. 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 organisation 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 organisation to generate higher 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 organisations, thus allowing them to expand further in attempt to increase capacity utilisation

On the other hand, Austria GDP growth is not as big when compared against several emerging markets,...
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