Introduction
Economics is a field which has its active recognition and association in almost every walk of life. There is no single definition of the term “Economics” exist in the world as every author has had defined the concept in a somewhat different manner. Adam Smith and Alfred Marshal are known as the fathers of economics, as they proposed the most basic and effective definition of this term.
According to both of them, Economics is the name of how to earn the money and how to consume it. It is one of the most important definitions from the viewpoint of the current society. Economics have two different types, which particularly are microeconomics and macroeconomics. Microeconomics is the name of economics that deals with the economics of individuals, while economics that deal with the economics of the economy as a whole is known as macroeconomics.
There are certain concepts which come under the ambit of economics and every concept has its own significance and importance in a broad nutshell. The concept of Gross Domestic Product (GDP) is one of the most important concepts which used for different purposes in particular. GDP is a term which used to define the concept that how much money has been got by a country. GDP is constituted of four things which are savings, consumptions, investment and net exports. GDP identified the net worth of a country in particular. The main perspective of this assignment is to analyze the importance of stagnate and high growth of some different periods. It is required to analyze different periods of economic expansion and periods of economic contraction, and investigate the main reason behind this particular aspect.
GDP Analysis Period (1938-1944 and 1995-1999)
The United States of America (USA) had envisaged many ups and downs in its corporate history. It is one of those countries of the world which has been envisaged numerous things in different time periods. The periods from 1938 to 1944 were some of the perfect time periods for the economy of the US as a whole.
The GDP of the US increased tremendously well from the year 1938 to 1944, merely because of the high consumption from the citizens of the United States. On average, the growth rate of the country in that time period was nearly 5% to 6%, which is quite high as compared to any other country operated in the same time period.
The period from 1995 to 1999 was also effective in particular. Mentioned below is the chart is mentioned below
It can be seen that the real GDP of the country was nearly 1% in the first quarter of 1995, which increased to a level of 3.4% in the year 1995. In 1996, a significant amount of growth nearly to a level of 2.8% has been envisaged, while it increased tremendously well in the 3rd quarter of the year 1996 and went to a level of 7.1%. At the start of 1997, the GDP growth rate of the US was 4.4%, and it went on a level of 6.1% in the 3rd quarter of 1997 (Economics). The period from 1998 to 1999 was the golden period for the United States, as the country envisaged a real time growth from 3.1% to 7.1% in particular which was extremely high. At the end of the fiscal year (FY) 1999, the GDP growth rate of the United States was 5.2%, which was extremely high as compared to the same period of last year. It was the time, when the economy of the United States was growing with a robust pace and almost every economic indicator is in the favor of the country. It was the time when the unemployment rate of the country was also at a lower place and the rate of Foreign Direct Investment (FDI) is on a higher scale in particular. The spending of government was also increasing at the same time and the same thing can be found in the below mentioned analysis
It can be found from the analysis that the government spending was actually increasing with a robust pace in the United States (US) from 1996 to 1999. The histogram shown in the above mentioned graph is showing a growing trend of government spending which is also effective from the standpoint of the country. Apart from the government spending, the consumer spending was also increasing with the same speed, which was the main reason behind the escalating growth of the company. High consumption is also required to improve the financial capability of the organization.
Stagnant Growth Analysis (1929-1934 and 2008-2010)
It is not like that the United States (US) always grew with a robust pace in particular but there are other things as well which are quite important from the viewpoint of the country. There are certain periods in the history of the United States in which the growth was stagnant and among those periods, the time of 1929-1934 and 2008 to 2010 were some of the major ones.
There were pure reasons behind the stagnant growth in both of these time periods. During the era from 1929-1934, the growth of the United States was stagnant. It was the era in which the growth was becoming stagnant merely due to the world war and people started to hoard their money and became reluctant to invest it in different places. The GDP growth rate of the United States was in the negative node in the fiscal year 1929 to 1934.
The time period from 2008 to 2010 was extremely bitter for the economy of the United States, as it was the time when the economy of the United States (US) went from a severe recessionary period. The recession was started due to the collapse of two giant mortgage firms in the United States (US) and shaking the confidence of the people from the investment.
The growth rate was in negative and it was very negative in the year 2009 showing a figure of -8.3%. After that period, the growth in the real GDP was very limited. The main reason which has been investigated behind the stagnant growth of the economy of the US was not government spending, but the reluctance of the people to invest their money.
Conclusion
The main perspective of this assignment is to analyze the importance of stagnate and high growth of some different periods. From the entire analysis, it is found that claiming that government spending is the main reason behind the high and low growth of an economy is not right, but the consumption of people has more worth in it.
Work Cited
Economics, Trading. "United States GDP Revised Down to 2.4% in Q4." Tradingeconomics.com, 2014. Web. 1 Mar 2014. <http://www.tradingeconomics.com/united-states/gdp-growth>.
