Measuring Economic Health Memo Research Paper Example | Topics and Well Written Essays - 500 words

Measuring Economic Health memoranda - Research Paper ExampleIn general, markets go through boom-bust cycles about every twenty old age (Mead, 1992). Knowing how gross domestic product is doing now helps to predict if were in a boom or a bust, which is meaning(a) to the business cycle.However, GDPs value as an economic indicator, and therefore a predictor of the business cycle, is coming below attack now. Roubini, for example, crests out that, The best advice I can give you is to realize that there is an unavoidable gist of uncertainty in the economy. This is even more true of firms and their financial statements. So what do we do? My resource is to get out of this racy altogether, but not everyone has this option---a firm, for example, has to forge ahead the best it can. The first amour you should know is that theres a lot of uncertainty out there, and no amount of commercial forecasting is release to change that. Roubini is saying that GDP isnt ever for certain It can be de termined one grade then the same year can be revised a whole percentage point later Its hard to predict things like wars or terrorist attacks.In fact, GDP is very easy to game (Ritholtz, 2010). You simply under-report inflation, and GDP appears to be better than it is. Since inflation depends on counting the value of a well-grounded last year, and doing so across many goods to make sure that its not just one or two goods that grew in price for other reasons, theres a lot of subjectivity and uncertainty in do it.GDP is also not as helpful as it could be because it positively counts negative externalities (Ritholtz, 2010). That content that pollution, which is a bad thing, is counted as a good thing because it makes people spend money to go to the doctor or buy new houses to move. If you buy a car, the GDP goes up. If you cut a tree, the GDP goes up. But if you preserve the tree, the GDP does not grow. Now you have to decide whether you need the tree or the GDP (Sharma,