Factors That Affect The Value Of An Economy

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There are numerous variables or characteristics employed to estimate the health or strength of an economy, known as macroeconomic variables. This can include the following: The Inflation Rate It is referred to as the constant rate of change in the price level in the economy. Many economies encounter positive rates of inflation yearly (Sommers, 2005). Mostly, the price level is usually measured by a price index, which evaluates the price level of goods and services at a particular point in time. Again, the number of items contained within in a price index differs depending on the main objective of the index. Mostly, government agencies occasionally present three types of price indexes; each index has a definite uses and benefits. They include the consumer price index, producer price index and implicit GDP price deflector (Ball, 2012). Zero percent inflation may happen to be ideal, but it is neither realistic nor desirable. A fair rate of inflation of between 1-2 percent is thought to be desirable by immense number of economists. The inflation rate of up to 5 percent is acceptable (Sommers, 2005). However, double-digit inflation rates are absolutely considered detrimental by most economists. Unemployment Rate The employment level is regularly quoted in relations to the unemployment rate; usually it is defined as the fraction of labor force presently not working (but aggressively seeking employment). Whether or not an economy is performing well in relation to the unemployment
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