Big E Auto
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- Date Submitted: 03/07/2010 05:07 PM
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Macroeconomic Measures of Output, Prices and their Justification in Planning
Big Drive Auto tracks vehicle unit sales and its own price index of vehicle sales prices with 2000 as the base year. Using Real Gross Domestic Product (GDP) and Consumer Price Index (CPI), an aggregate demand and supply curve can be generated to determine vehicle pricing levels as well as supply levels of inventory. The Real GDP takes into account consumption, gross investments, government spending, exports, and imports. Specifically, the GDP subcategory of motor vehicle durable goods can be tracked and used for planning of staffing and prices.
Given that a large volume of vehicles are imported, this is important that imports are included in the GDP. Big Drive Auto needs to determine the mix of American and foreign autos and trucks to keep in inventory. The exchange rate and tariffs will also play a part in how much of the GDP is comprised of imports.
The Relationship between Big Drive Auto’s Data and the Macroeconomic Measures
The output relationship between Big Drive Auto’s vehicle sales can be compared to GDP by vehicle industry for the United States (Bureau of Economic Analysis, 2009). The Motor Vehicles Output chart below shows Big Auto vehicle sales trend with the United States GDP for Motor Vehicles over the same years of 1998 to 2007 (ibid).
The output relationship between Big Drive Auto’s Index of Sales (base year = 2000) is compared to the United Stated GDP Price Index by motor vehicle industry in Motor Vehicle Price Index chart below. This chart shows that Big Drive Auto’s real dollars, compared to year 2000, has remained constant from 1997 to 2007. The United States’ real dollars, compared to year 2000, has trended downward at a large rate of change compared to Big Drive Auto. This indicates that compared to year 2000, the average price for motor vehicles has declined comparatively in the United States, although Big Drive Auto’s prices have remained the same...
Big Drive Auto tracks vehicle unit sales and its own price index of vehicle sales prices with 2000 as the base year. Using Real Gross Domestic Product (GDP) and Consumer Price Index (CPI), an aggregate demand and supply curve can be generated to determine vehicle pricing levels as well as supply levels of inventory. The Real GDP takes into account consumption, gross investments, government spending, exports, and imports. Specifically, the GDP subcategory of motor vehicle durable goods can be tracked and used for planning of staffing and prices.
Given that a large volume of vehicles are imported, this is important that imports are included in the GDP. Big Drive Auto needs to determine the mix of American and foreign autos and trucks to keep in inventory. The exchange rate and tariffs will also play a part in how much of the GDP is comprised of imports.
The Relationship between Big Drive Auto’s Data and the Macroeconomic Measures
The output relationship between Big Drive Auto’s vehicle sales can be compared to GDP by vehicle industry for the United States (Bureau of Economic Analysis, 2009). The Motor Vehicles Output chart below shows Big Auto vehicle sales trend with the United States GDP for Motor Vehicles over the same years of 1998 to 2007 (ibid).
The output relationship between Big Drive Auto’s Index of Sales (base year = 2000) is compared to the United Stated GDP Price Index by motor vehicle industry in Motor Vehicle Price Index chart below. This chart shows that Big Drive Auto’s real dollars, compared to year 2000, has remained constant from 1997 to 2007. The United States’ real dollars, compared to year 2000, has trended downward at a large rate of change compared to Big Drive Auto. This indicates that compared to year 2000, the average price for motor vehicles has declined comparatively in the United States, although Big Drive Auto’s prices have remained the same...