Question

Lester Scholl's administrative assistant calls you on Monday afternoon to set up a conference call between you and the chairman tomorrow morning to discuss the board's reaction to your list and to discuss your next task. You call the number she gave you, and Lester joins the call shortly after.

"I'm pleased with your work," he says. The board was impressed with your list of factors. Your ranking made sense because your explanations were well-written. I suspect they read everything you sent because it was concise and clear. Good job."

"Thanks," you say, and you feel relieved that your first assignment was well-received.

"Your list provided the basis for a good conversation about the manufacturing operations," he says. "We want to know more about the economy of both countries to further inform our decision-making process."

"That makes sense," you say. "The United States and South Korea hold many distinct economic factors that may affect AutoEdge’s long-term financial performance."

"Right," he says. "Your research on the two economies will give the board enough information so we can advise the new, incoming CEO."

"What should my research include?" you ask.

"In your research, you must take into consideration several macroeconomic factors," he says. "We want to see information about the gross domestic product (GDP), unemployment, interest rates, and inflation for both the United States and South Korea. Make sure your research is current; that is, no more than 6 months old."

"I'll get started right away," you say.

"Very good," he says. "Let me know if you have any questions, and I'll put you in touch with some of the other members of the board if I can't provide the answers you need."

"Great," you say. "Thank you."

discusses and analyzes data within the last 6 months regarding the gross domestic product (GDP), unemployment, interest rates, and inflation for both the United States and South Korea. PLEASE USE DETAILS AND EXAMPLES

Answer 1

Introduction:-

The countries of United States and South Korea are the pioneers of technological innovation and have largely created jobs around the key idea of bringing in new products and services across the globe which have led to great economic and social success for the two countries respectively.

The United States is undoubtedly one the key giants in almost every industry, and its currency the Dollar is probably the most widely used currency in international trade and commerce and is the most compared with in international standards.

The country of South Korea on the other hand, has seen great technological development from which the country has grown as well. The likes of companies such as Samsung, Hyundai, and Kia etc. are widely popular names and generate great revenue and employment in the country respectively.

Now that we are aware of the fact, that the two countries are pioneers of technological innovation and are highly successful international communities we can evaluate the same on various parameters.

Case Specifics:-

Gross Domestic Product:-

Gross Domestic Product, is a measure of the value of final goods and services which a country produces. The value of final goods is considered to avoid double counting. For example: - In the final price of a bed, the price of wood is already included. Thus recounting the same, would lead to over estimation. To avoid this, only final goods are considered.

United States:-

The current evaluation of GDP is based on the concepts of Fiscal Year, Which runs from April to March. The current cycle is Q4'18. In this, the gross domestic product of the United States rose to 2.2% about 0.4 % lesser than industry estimates.

In the previous period which is Q3'18, it rose by 3.4% The major reasons for such a decline was estimated because of the fall in public spending and the investment on Fixed Assets declining respectively.

South Korea:-

South Korea, has seen average growth rate of 1-3% in the past five years. Relatively in Q4'18, the economy grew by 1% which is a significant number considering the sluggish growth of 0.6% in the previous quarter. The main reason for the rapid increase was the effects of increased public spending and government expenditure rising.

Unemployment Rate

The Unemployment rate reflects on how the income is distributed across different countries across the globe. It is one of the key qualitative measures and helps in assessing whether or not growth across different countries is inclusive in nature or not.

It is the assessed by the total number of those people who are in search for jobs but are unable to find one due to various reasons such as education, abilities, market conditions etc.

United States:-

The Unemployment rate in The United States in the Last 6 Months has been about 3.5-4 % of the general population of the country. It was maximum in the month of January when it was 4% whereas lowest in November when it was 3.7% respectively.

The decline of January can largely be attributed to the Government Shutdown during the period which increased government workers being out of work respectively.

South Korea:-

South Korea had a similar trend of unemployment. The countries unemployment rate was pegged at a sharp 4.4% in January 2019, post which it saw a decline to about 3.7% respectively.

Further, it has stayed at about 3.9-4% mark during the last 6 months respectively.

Interest Rates:-

Interest rates reflect the rate at which loans are given to the general public, and the rates which they receive against deposits. It is a known fact, that in developed economies to boost growth loans are available at relatively lesser rates, to fuel growth whereas on deposits as well they are significantly lower when compared to developing counterparts respectively.

The Interest rates across the two countries is as explained respectively.

United States:-

The interest rates in the United States are fixed at about 2.25% at which one can get loans from commercial banks within the country. This is largely because the Federal Reserve and the Open Market Committee which makes decisions on interest rates has keenly wanted the countries growth to be stable.

The interest rates pay a key part for business owners to expand their operations and lower interest rates are indicative of availability of higher capital for the same. In this, the United States is expected to maintain a healthy rate of 2-3% in the long run to maintain and fuel growth in the economy respectively.

South Korea:-

South Korea on its part had an interest rate of 1.75 % which is indicative of how the government wants to increase overall investment opportunities in the country as described above respectively.

Inflation:-

Inflation is a measure of the rise in prices of goods and services in the country. It is a general increase in the prices of goods and services over a period of time, and is experienced across all parts of the world.

A healthy inflation rate is necessary to fuel growth in the economy but should not go unchecked to avoid problems.

The Inflation rate of the two countries across a 6 month period is as follows:-

United States:-

The inflation rate has been gradually decreasing in the United States across the last 6 months. It was pegged at 2.3% In September 2018, and fell down to about 1.5% In February 2019 respectively. The inflation rates is primarily lower because of reduction in prices of gasoline and other Consumer Durables respectively.

South Korea:-

South Korea on the other hand has also seen a similar trend in the inflation rates. It was as high as 2% in November and is only 0.5% in February respectively.

The rates confirm that the country is progressing and becoming more affordable for a big chunk of the overall population respectively.

Please feel free to ask your doubts in the comments section if any.