GDP and the Economy
Saanvi Kunisetty
Gross Domestic Product (GDP) is a measure of the total dollar value of all the final goods and services during a given period of time. GDP is an essential economic indicator, because it corresponds to the nation’s overall economic activity, and signals to whether the economy is growing, shrinking, or is relatively stable. Observations and graphs show our country’s GDP, highlighting that, when the pandemic struck in 2020, the US GDP dropped significantly, and there was originally a negative percent change compared to before, indicating that our economy was suffering from recession. This points to several things such as layoffs and higher unemployment rates, along with decreased revenues and consumer spendings. As we progressed, the economy began to improve from the pitfall it suffered, continuously having a positive percent change from before, meaning that the GDP was rising over time. This economic recovery can be even further aided by implementing an expansionary fiscal policy, which serves to end recession and prevent depression. This can be done in several ways, such as using subsidies and imposing income tax cuts to increase money in the consumers’ hands, and hiring government workers to reduce unemployment, increase demand, and propel consumer spending, which plays a major role in the economy. Furthermore, the Federal Reserve can take several measures relating to expansionary monetary policies to stimulate the economy. Decreasing the discount rate allows consumers to borrow more cheaply, putting more money in the hands of the consumer, and boosting the economy. In addition, the reserve ratio can be lowered in order to encourage banks to loan money and consumers to purchase it.
Resources:
https://www.bea.gov/data/gdp/gross-domestic-product
https://www.thebalance.com/expansionary-fiscal-policy-purpose-examples-how-it-works-3305792
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