Econ 545 Course Project

ECONOMICS 545 MACROECONOMIC ANALYSIS - PROJECT 2

TITLE: EXPANDING OPERATIONS TO MEET INCREASING DEMAND OF AUTO PARTS MANUFACTURERS.

This research paper is written to advice Ricky who is in the Auto parts manufacturing business and is pondering to expand his manufacturing. The decision to expand will be based on the following macroeconomic variables; Gross Domestic Product, Business cycles, Unemployment, Inflation, International trade, Fiscal Policy, Monetary policy, Interest Rates and Demographics

Automobile Industry overview

The automotive industry is a major contributor to national and global economies. From 2000 to 2012, the industry contributed an average of 3.6 percent of the U.S. Gross Domestic Product. Motor vehicles and auto parts represent the single largest export sector in the U.S. The influence of the automotive industry is quite broad and instrumental to growth of U.S economy. The auto industry supports jobs and economic benefits through related employment at parts manufacturers, dealers, suppliers and service shops, and through the expenditures of people employed by those industries. One recent study found that approximately 8 million private-sector jobs are impacted by U.S. auto manufacturers, parts suppliers and dealers. Studies have shown that, if the domestic auto industry were to fail, up to 3 million direct and indirect jobs would be lost in the first year. This same study said the loss of the domestic auto industry would also reduce personal income in the U.S. by more than $398 billion over three years and would cost the government more than $156.4 billion over three years, due to increased transfer payments, decline in Social Security income and decline in personal income taxes.

Gross Domestic Product (GDP)

Gross domestic product is the output of goods and services produced by labor and property in the United States. The gross domestic product (GDP) is the primary indicator used to measure the health of a country's economy. GDP...