In the third quarter of 2020, real GDP increased in all 50 states and the District of Columbia. According to the Bureau of Economic Analysis, the United States’ overall real GDP expanded at a rate of 33.4 percent each year. The annual growth rate of real GDP in each state ranged from 19.2 percent in […]
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Multiplying by 100 produces a beautiful round value, which is useful for reporting. To calculate real GDP, however, the nominal GDP is divided by the price index multiplied by 100. The price index is set at 100 for the base year to make comparisons easier. Prices were often lower prior to the base year, so
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Between 2016 and 2022, the average inflation rate of 2.83 percent will compound. As previously stated, this yearly inflation rate adds up to an overall price difference of 18.21% after 6 years. To put this inflation into context, if we had invested $100 in the S&P 500 index in 2016, our investment would now be
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Inflation is defined as a positive difference between nominal and real GDP, whereas deflation is defined as a negative difference. In other words, inflation occurs when the nominal value exceeds the real value, and deflation occurs when the real value exceeds the notional value. Is nominal GDP always higher than actual GDP? As a result,
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Expansionary fiscal policy boosts aggregate demand by increasing government expenditure or lowering tax rates. Expansionary policy can achieve this by: (1) increasing consumption by increasing disposable income through personal income tax or payroll tax cuts; (2) increasing investment spending by increasing after-tax profits through business tax cuts; and (3) increasing government purchases by increasing federal
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Buying a home during a recession will, on average, earn you a better deal. As the number of foreclosures and owners forced to sell to stay afloat rises, more homes become available on the market, resulting in reduced housing prices. Because this recession is unlike any other, every buyer will be in a unique position
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Bonds’ deadliest enemy is inflation. The purchasing power of a bond’s future cash flows is eroded by inflation. Bonds are typically fixed-rate investments. Inflation (or rising prices) reduces the return on a bond in real terms, which means adjusted for inflation. When a bond pays a 4% yield and inflation is 3%, the bond’s real
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We can conclude from this observational analysis that there is a positive, exponential link between literacy rate and global GDP per capita. As a result, as the literacy rate rises, so does the GDP per capita. What impact could a low literacy rate have on a country’s economy? Reading is more than just being able
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A recession is defined as a drop in economic activity that lasts at least two quarters and results in a decrease in a country’s gross domestic product (GDP). Translation? A significant decline in consumer expenditure, resulting in job losses, personal income losses, and business profit losses. This is frequently the outcome of a financial shock,
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Inflation is another lagging signal, indicating that demand has increased as a result of economic expansion, and prices are rising to keep pace. Inflation is a type of indicator. Inflation is defined as an increase in the price level of goods and services. the products and services purchased by households It’s true. The rate of
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