It is computed as the difference between exports and imports. In order to stimulate the economy policy makers employ either fiscal or monetary policies to affect macroeconomic variables. For instance, a decrease in interest rate can boost investment and increase the level of GDP. The current situation of UK is a very common trend in every major economy. After skyrocketing mounts in output levels, growth to start to taper off and enter a showdown. The role of policy makers during this stage cannot be overstated. In order to stimulate the economy, macroeconomic variables are regulated. However, as economics is a social science and policy makers are constrained in analyzing the effects of policies in ceteris paribus, it becomes important that they fully asses the economic repercussions of their implementations.
This paper will look at the economic performance of the United Kingdom by looking at the recent historical value of GDP. The first part will discuss the behavior of GDP from 1990-2005 and determine the trends underlying this behavior. This report will also try to explain the growth or reduction in GDP by looking at the individual components of GDP. Then, it will discuss the fiscal and monetary policy of UK as well as suggest recommendation to further enhance the performance of the economy.
Figure 1 shows the GDP of United Kingdom from ...Show more