Importance of Understanding about GDP Data
GDP is an indicator for tracking the health of an economy, which considers aspects such as a nation’s investment and consumption. Knowledge about GDP data can help to determine an economy’s status. If the GDP data shows an increase, the economy is implied to be doing well (Sujianto & Azmi, 2020). On the other hand, a decrease in GDP indicates the decline of the economy, which can be attributed to various issues. Besides, having an understanding of GDP data can be applied to determine employment status. Companies are likely to hire more employees if the GDP grows strongly, resulting in the increased financial capability of people. Unemployment is likely to increase with shrinking GDP because it results in an unhealthy economy (Sujianto & Azmi, 2020). Notably, it is important to understand GDP data because it can be used to determine the status of employment and the economy.
Effects of Changes in Inflation and Unemployment on Future GDP
The increase in unemployment and inflation contributes to a decrease in the future GDP. Although inflation may foster economic growth, it may not have positive impacts in the long run. An increase in inflation results in a nation’s economy realizing a short-term gain, after which it declines (Sujianto & Azmi, 2020). Remarkably, this is because inflation is associated with high long-term costs. High unemployment will result in a decline in the economy, implying a decreased future GDP. In this case, consumer spending reduces with an increase in the unemployment rate causing slow economic growth, which adversely affects the GDP.
Example of Business Altering Business Plans because of Economic Conditions’ Changes
A catering business changed its business model to survive during the Covid-19 era. The coronavirus crisis contributed to the shutting down and decline of the U.S. economy, and people stayed indoors to reduce the spread of the virus. For instance, the catering business shifted to creative alternatives and virtual meetings, enabling companies and individuals to hold events online. In this case, business planned to use innovation to cope with the situation. Although coronavirus worsened the economy, the change of business plans enabled the catering business to survive effectively.
Reference
Sujianto, A. E., & Azmi, M. F. U. (2020). Associative study on government spending, inflation, trade balance, and gross domestic product. Ekuilibrium: Jurnal Ilmiah Bidang Ilmu Ekonomi, 15(1), 27-37.