The Calculation of GNP Essay Example | Topics and Well Written Essays - 750 words

The Calculation of GNP - Essay Example 120 x 22 = 2640. In 2005, 210 tennis racquets were sold. 210 x 120 = 25,200. 2640 + 25,200 = 27, 840. Let 2004 be the base year. In 2004, 100 CDs were sold. 100 x 22 = 2200. In 2004, 200 tennis racquets were sold. 200 x 120 = 24,000. 2200 + 24,000 = 26,200. Percent Growth = 100% x ((27,840-26,200)/26,200)) Percent Growth = 7.02% Using 2005 as a base year, the real GDP for 2004 is 26,200 and the real GDP for 2005 is 840. This shows an increase of 7.02%. 10/10 4. Review GDP over last 5 years from BEA's website and summarize trends> Discuss two or three events which may have caused these trends. Although the last five years did not experience any recessions, the years 2000 and 2001 were low points in economic growth. Incidentally, the 1960s, 1970s, 1980s, and 1990s, all saw recessions in their first few years, so this slowing of economic growth early in the decade is not unusual (Orszag 2001). Like in other decades, after these first few slow years, the growth rate begins to accelerate again gradually through 2002 and 2003. At this point (late 2003, early 2004) we see a period of particularly fast growth (2003q3 9.3%, 2003q4 5.5%, 2004q1 8.1%) (Bureau of Economic Analysis, 2006). This may have been caused by government initiatives to give the economy a short-term boost for the year of the election (2004). If these initiatives were put into play half-way through 2003, it's possible that they were quite successful initially but only for a short time, and not very far into 2004. Although the GDP does rise in the 2004 and 2005, it's growth has been decelerating ever so slightly over the past two years. Still it remains fairly stable. The recent stability of the economy, despite extremely high energy prices, can be attributed to the relatively... At this point (late 2003, early 2004) we see a period of particularly fast growth (2003q3 9.3%, 2003q4 5.5%, 2004q1 8.1%) (Bureau of Economic Analysis, 2006). This may have been caused by government initiatives to give the economy a short-term boost for the year of the election (2004). If these initiatives were put into play half-way through 2003, it's possible that they were quite successful initially but only for a short time, and not very far into 2004. Although the GDP does rise in the 2004 and 2005, it's growth has been decelerating ever so slightly over the past two years. Still it remains fairly stable. The recent stability of the economy, despite extremely high energy prices, can be attributed to the relatively low unemployment rate throughout the last year (Sniderman, 2006). Sniderman, M. (April 2006). The Economy in Perspective. Research Department of the Federal Reserve Bank of Cleveland. Retrieved April 15, 2006, from www.clevelandfed.org/Research/ET2006/0306/eip.pdf. Two formerly undeveloped economies, that of Singapore and that of Hong Kong, have shown unprecedented growth in the past fifty years. However, developing countries would benefit more from following an economic model similar to that of Singapore given the current economic trends and conditions.