Final Proj Macro - La Rosa1 Melissa La Rosa Dr. Edmondson...

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La Rosa1 Melissa La Rosa Dr. Edmondson Macroeconomics 2/7/12 Final Project-Large Macroeconomic Countries In these two large economic countries, China and the United States that are so closely linked and will be even more so in the future. China and United States are the two largest contributors to one another’s prosperity and to global economic growth. These two countries are linked together by trade, exchange rates, and investments. We will be discussing the many variables to include: GDP/GDP Growth Rate, Exchange Rate, and Inflation Rate, Interest rate on Short-term Government Debt, Unemployment rate, and Trade Deficit. GDP is everything that a country's economy produces in a year. For example, GDP in the U.S. is $14.7 trillion, making the U.S. seemingly the most prosperous country in the world. GDP per capita must be measured using purchasing power parity. This allows you to compare the standard of living between countries by taking into account the impact of their exchange rates. Imports and exports have opposite effects on GDP. Exports add, while imports subtract, from GDP. Imports are greater than exports, and so the net effect of trade is a deficit. Imports are growing faster than exports, thanks to jobs outsourcing in manufacturing. The trend in the GDP for the U.S. means that the economic conditions were the following in the last ten years starting with 2000. The 2000 recession was over by 2003, growing 2.5%, and expanding 3.6% in 2004. In 2005, Hurricane Katrina slowed growth to 2.9% in 2005. By March 2006, the economy recovered to 4.8% with the housing bubble peak. But high oil prices dragged on growth the rest of 2006, which only grew 2.7%. (Source: BEA, GDP News). The economy only grew 1.2% in the first quarter of 2007 as the housing bubble popped.
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La Rosa2 A falling dollar boosted exports, spurring growth to 3.2% in the second and 3.6% in the third quarters. When the Subprime Mortgage Crisis hit in October, growth slowed to 2.1%. Overall, the economy expanded 2.1% in 2007. In 2008 and 2009, the economy contracted for four consecutive quarters. China’s trend in GDP was the country's first production census discovered at the end of 2005 that GDP has recently been grossly underestimated as a result of a failure to take into account the rapid growth of the services sector. As a result, growth rates for 2003-2005 are now recorded at around 10% per year in real terms. Despite efforts to cool the overheating economy, the officially recorded GDP growth rate was 11.4% in 2007. In 2008 the global economic crisis began to reduce China's growth rate. In the face of forecasts that this might drop below the rate at which school leavers can be absorbed by the growing economy (7%-8%) the government decided to pump Rmb 4 trillion into the economy in the form of an economic stimulus package consisting largely of investment in fixed infrastructure and human capital.
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La Rosa3 GDP growth rate is the most important indicator of economic health. GDP growth rate
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Final Proj Macro - La Rosa1 Melissa La Rosa Dr. Edmondson...

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