Country's economy Case Study Example | Topics and Well Written Essays - 2000 words

Countrys sparing - Case Study ExampleThe pulp down the stairs shows the economic product in eight major countries from 1870 to 1996. In 1870, Australia was the richest economy whereas Japan was the poorest economy of the xvi major economies of that time. In the identical year, Australias real GDP per capita was al nearly five times that of Japan. all over the following 126 years, Australias economy grew by 1.3% which allowed real GDP per capita to gain by 5 times. However, during the same time, Japans economy grew by 2.7% which allowed its real GDP per capita to advance by 28 times. Likewise, Figure 11 also shows the progress made by United States from 1870 to 1996. The long-run straddle of economic growth of the Ameri stub economy was 1.7% which allowed it to levy its living standards by 8 times in 126 years. Therefore, the long-run rate of economic growth is an important measure of the nations wealth. (Bernanke, 2003) Figure 1 Economic harvest in Eight Major Countries Th e make of the economy depends upon the quality and quantity of agitate and capital and on their productivity. If the inputs are constant, there is no economic growth in the country. Therefore, one of the inputs has to change along with the productivity for a healthier growth rate. The relationship between inputs and outputs of the economy are reflected in the following equivalence which also shows the important factors that affect the long-run rate of economic growth. (Bernanke, 2003) Y= AF (K, N) Where Y = Output of the economy A = Productivity N = Labor K = Capital Requirements Labor Labor refers to the working enduringness of the nation-be it skilled, semi skilled or unskilled. Labor is one of the most important inputs into the economy. A skilled, educated project force fabricates a strong contribution to the other factors of the economy. Along with them, the economy also requires semi-skilled and unskilled labor. However, the most important thing is their constant supply to the market. Similarly, the skills acquire must match the demand of the economy. (Bernanke, 2003) Technological proceed Technological progress refers to the ability of the nation to adapt to update infrastructure and equipments. No country can expect to progress without the necessary infrastructure for specific technology. In our globalized world, the economy needs to incorporate streetwise technology replacing the obsolete machines to match the increasing demands. The smooth flow with the technological progress allows make the necessary progress. (Bernanke, 2003) Investment Investment refers to the capital requirements of the growing economy. The country needs consistent investment to make remarkable progress and achieve long-run rate of economic growth. Therefore, the nation needs to establish an surround that allows the continuous flow of foreign direct investment into the country and a credit history that allows it to raise the debt when needed. However, there needs to be s ustainable amount of debt so that it does not hamper the growth in the long run. (Bernanke, 2003) Productivity It is another important factor for consistent long-run growth rate. This component refers to increase in the efficiency and effectiveness of the same labor and capital inputs. Therefore, if the productivity of the nation increases keeping the labor and capital same, the economy will growth by a certain factor. (Bernanke, 2003) Answer 2 utter(a) Domestic Output (GDP) is defined as market value of all the goods and services produced by a particular nation within the domestic boundaries. (Amadea, 2011) There are four components of the GDP as shown in the following equation Y = C + I + G + X Where Y = Total output C = Personal consumption expenditures I = Investment G = Government spending X =