Reference no: EM131090322
GDP matters. Investors and business leaders are always anxious to get the latest numbers. When the Bureau of Economic Analysis releases its first estimate of each quarter's GDP, normally on the 27th or 28th day of the month after the quarter ends, it's invariably a big news story.
In fact, many companies and other players in the economy are so eager to know what's happening to GDP that they don't want to wait for the official estimate. So a number of organizations produce numbers that can be used to predict what the official GDP number will say. Let's talk about two of those organizations, the economic consulting firm Macroeconomic Advisers and the nonprofit Institute of Supply Management.
Macroeconomic Advisers takes a direct approach: it produces its own estimates of GDP based on raw data from the U.S. government. But whereas the Bureau of Economic Analysis estimates GDP only on a quarterly basis, Macroeconomic Advisers produces monthly estimates. This means that clients can, for example, look at the estimates for January and February and make a pretty good guess at what first quarter GDP, which also includes March, will turn out to be. The monthly estimates are derived by looking at a number of monthly measures that track purchases, such as car and truck sales, new housing construction, and exports.
The Institute of Supply Management (ISM) takes a very different approach. It relies on monthly surveys of purchasing managers - that is, executives in charge of buying supplies - who are basically asked whether their companies are increasing or reducing production. (We say "basically" because the ISM asks a longer list of questions.) Responses to the survey are released in the form of indexes showing the percentage of companies that are expanding. Obviously, these indexes don't directly tell you what is happening to GDP. But historically, the ISM indexes have been strongly correlated with the rate of growth of GDP, and this historical relationship can be used to translate ISM data into "early warning" GDP estimates.
So if you just can't wait for those quarterly GDP numbers, you're not alone. The private sector has responded to demand, and you can get your data fix every month.
1. Why do businesses care about GDP to such an extent that they want early estimates?
2. How do the methods of Macroeconomic Advisers and the Institute of Supply Management fit into the different methods for calculating GDP?
3. If private firms are producing GDP estimates, why do we need the Bureau of Economic Analysis?
|
Amnesty program affect the flow of future border crossings
: Why do you think so many state and local governments are greatly concerned about the Federal government’s allegedly lax enforcement of the immigration laws and congressional proposals to grant legal status (amnesty) to the 12 million illegal immigran..
|
|
In general a production possibilities curve
: Which one of the following statements is not accurate? In general a production possibilities curve:
|
|
Would simply change the quantity demanded
: One of the more confusing topics in economics is the difference between consumer demand and the quantity demanded. Consumer demand is the entire schedule for the demand of a good for all consumers at every price, typically represented by a downwards ..
|
|
How might tax incidence differ in the short and long run
: In a market with free entry and exit, who bears the burden of a tax? Given this fact, how might tax incidence differ in the short and long run? [HINT: Recall how the market supply curve looks like when there is free entry and exit]
|
|
Supply management fit into methods for calculating gdp
: GDP matters. Investors and business leaders are always anxious to get the latest numbers. When the Bureau of Economic Analysis releases its first estimate of each quarter's GDP, normally on the 27th or 28th day of the month after the quarter ends, it..
|
|
Individuals ought to consume additional units of goods
: Individuals ought to consume additional units of goods and services if their marginal: A. cost exceeds its marginal benefit. B. benefit is still positive. C. cost equals its marginal benefit. D. benefit exceeds its marginal cost.
|
|
Designed to promote competition-improve market efficiency
: In principle, the antitrust laws are designed to promote competition and improve market efficiency. Given the work by Williamson (1968) and Demsetz (1973), explain why these laws may promote static efficient but fail to promote dynamic efficiency.
|
|
Level of competitiveness-number of firms-type of pricing
: Form a table, across the top level four columns with the four market model structures. Along the left column working down, label “Level of Competitiveness”, “Number of Firms”, “Type of Pricing”, “Amount of Product Differentiation”, and “Ease of Entry..
|