Growth Indicators - Lesson 1
In our previous lesson, we discussed expectations theory and how it affects the market’s behaviour. In the current lesson, we will discuss macroeconomic indicators measuring an economy’s growth.
The GDP rate is the most well-known growth rate in the field. The rate measures the change in the market value of all final goods and services produced within an economy in a given period of time. The rate can be expressed on a month on month, quarter on quarter or year on year basis. It is the widest measure of economic activity and the main indicator of an economy's health. A higher than expected rate tends to provide support for the currency of the economy the rate refers to, while a lower than expected rate should be considered as a negative.
GDP is calculated by using the following formula where GDP=C+I+G+(X-M) where ‘C’ is private consumption, ‘I’ gross private investment, ‘G’ is Government spending and ‘X-M’ is exports minus imports so essentially the country’s trade balance. GDP also stands for Gross Domestic Product.
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