Question

In: Economics

Identify and define other important macroeconomic metrics related to GDP and explain how each metric correlates...

Identify and define other important macroeconomic metrics related to GDP

and explain how each metric correlates to GDP. (need to be long and deep in detail)

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Expert Solution

ANS

The macro economic metrics related to GDP are consumption, investment, saving ,net exports etc. These are the important macroeconomic metrics related to GDP as these metrics directly affect the GDP. The consumption is the amount of money spend by the people in consuming the goods and services, the private final consumption expenditure has a positive correlation with the GDP as the more the people will consume the more the producers will produce. Investment are of two types in the economy the autonomous investment and the induced investment the autonomous investment are the ones that are done at every scenario and are compulsory to be done like making roads, hospitals etc, the induced investment is the one which is done by firms or government to adjust market or to tap on an oppurtunity. Both the autonomous and induced investment have a positive relation with the GDP of the economy. Savings is the amount of money that is kept aside from consumption or investment, the savings generally lower the economic growth and in usual have a negative relation with the GDP as when the people will save more then they will have less money to consume and the firms will produce less so there will be reduction in flow of money in the economy so the GDP will go down. Net exports is the difference between exports and the imports of the country or economy, the net exports have a direct positive relation with the GDP of the economy as when the net exports are more then it means that the demand of the good is more in foreign economies and due to which the producers produce more and hence the income of the economy increases and provides growth and increase in GDP.


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