In this essay I will be comparing the UK economy with that of the US, based on macroeconomic performance. To begin with I will set out what the most important dimensions in macroeconomic performance are. I will then go onto explain what factors need to be considered in order to assess the likely performance of the two economies, between the years 2003-2006 and 2030-2040, and how the two time periods may differ. I will then be using data obtained from the Organisation for Economic Co-operation and Development to defend my assessments.
Macroeconomics is the study of the economy as a system . It investigates the various changes that affect the whole economic structure of a country. A country's macroeconomic performance is based on a variety of factors such as unemployment, exchange rate, inflation, GDP (Gross Domestic produce) etc. .
In order to gain a clear picture of the macroeconomic performance of the UK and US, we must first establish which dimensions are most important in determining how an economy is functioning. .
Real GNP (Gross National Produce) measures the income of an economy, the quantity of goods and services the economy can afford to purchase . In the same way that a business" accounts are an indicator of how well the business is doing, a Nations accounts give us an idea of how well it is doing . GNP is a measure of this performance, it differs from GDP, as this measures the value of output in the economy , meaning that it doesn't take into account the net property income from abroad and thus doesn't show us the income from interest, dividends etc. Real GNP measures the total income earned by domestic citizens regardless of the country in which their factor services was supplied . This basically means that if a citizen of the country gets an income from investments in another country, for example, that is included in the figures. It also takes into account the fluctuating inflation rates, so that you can get a more accurate picture of growth.