Unemployment Rate or GDP OR CPI Research Paper Example | Topics and Well Written Essays - 500 words

Unemployment Rate or GDP OR CPI - Research Paper Example Thus, since GDP is a full representation of economic growth and production, it has a relatively large impact on nearly every aspect in the economy. When a certain economy is considered healthy, there are a number of related characteristics; low rate of unemployment and an increase in the level of wages as many businesses demand more labor in order to cater for the ever growing economy (Brezina, 20). Any slight change in the level of GDP is significant to a given economy since it affects the entire stock market. Economists have always argued that any bad economy is always associated with lower profits which implies that there are lower prices o stock in the markets. Thus, many investors in any economy will ever worry about the negative growth of GDP as it is a sole factor used to determine if an economy is on recession or not. A recession is associated with declining revenues in businesses, unemployment and layoffs (Lochner, 3). Moreover, when the growth rate of GDP is relatively fast, most Federal Reserve raise the rates of interest in order to stem inflation or rather the increasing prices in an economy. This could imply that the loans which are meant for homes and cars will become more expensive and thus businesses will experience high cost of borrowing. GDP is an extremely important measure in any country’s economy. Despite the fact that GDP cannot be easily determined, its value represents so many aspects in any given economy. This measure is significant to overall spending of a nation since depressions and recessions of a particular country are largely caused by the overall rate of spending. Furthermore, GDP is a measure of confidence since when the government, companies and individuals spend; it is a likely indication of a growing economy. However, when no one is spending, it is a likely indication of a contracting economy. Therefore, this