1. QUESTION 1 - THE US ECONOMY
The economy is a set of human and social activities and institutions related to the production, distribution, exchange and consumption of goods and services. An economy provides for a society in an organised manner, (Anon, 2001, ref 9). In order to discuss the US public confidence in the economy, the makeup of the economy must be looked at.
The United States has the biggest national economy in the world, with a Gross Domestic Product (GDP), for 2006, of $13.3 trillion dollars, (Anon, ref 1). GDP is defined as the monetary value of all the finished goods and services produced within a country's borders in a specific time period, (Valentine, 1997). It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.
1.1 GROSS DOMESTIC PRODUCT - GDP
GDP is the primary indicator used to gauge the health of a country's economy. Every aspect in a countries’ economy add to the GDP, (Heakal, 2002). In its most basic terms, the measure of GDP can be thought of the total of everyone’s income, or the total of what has been spent in that time period. Logically, both measures arrive at approximately the same total. It can be defined as an equation;
GDP = C + G + I + NX
Where:
"C" is equal to all private consumption, or consumer spending, in a nation's economy
"G" is the sum of government spending
"I" is the sum of all the country's businesses spending on capital
"NX" is the nation's total net exports, calculated as total exports minus total imports. (NX = Exports - Imports)
Private consumptions make up the greatest proportion of GDP. In 2006 consumer expenditure as a percentage o ...