Essay about The Most Important Economic Variables

1753 Words Mar 7th, 2016 8 Pages
5 most important economic variables
(1) GDP
(2) Interest rate
(3) Personal income and consumption
(4) Debt
(5) Inflation
【GDP】The gross domestic product (GDP) is one of the most important indicators to evaluate the condition of a country 's economy. It represents the total dollar value of all goods and services produced over a specific time period; thus the size GDP would also indicate the size of the economy of the country.
Normally, GDP is used to compare with the previous quarter or year’s number and it can present how fast the economy has grown or shrunk. For example, if the year-to-year GPD has grown by 5%, it means that the size of the economy has grown by 5%. Since the way of calculating GDP is the same from country to country, GDP can be used to compare the economy condition of various countries with a high degree of accuracy.
GDP can be calculated by either one of the following two ways: (1) by adding up what everybody’s income in a year (income approach), or (2) by adding up the money amount that everyone spent (expenditure approach). Theoretically, both ways of measuring should come to about the same number.
The first approach, which is the income approach, calculated the GDP by adding up total salaries, gross profits of companies, and taxes. The expenditure approach is an approach that is used more commonly and is calculated by adding total consumption(C), investment(I), government spending(G) and net exports(NX). Using the expenditure approach, GDP is…

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