Essay Example on Economic Theories & Indicators: US vs China

The most basic explanation of, economics is why people make the purchasing choices they do. Economics has three major concepts which are: supply and demand, incentives, costs and scarcity. This paper gives the economic indicators and economic theories in the United States then lastly compares the economy with that of China; It strives to explain that the United States is the largest economy.

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Every country follows a specific economic theory that attempts to describe economic occurrences, to explain the behaviour of the economy and then provide ways to solve the economic phenomena. The United States possesses a mixed economy (" ECONOMIC ORGANIZATION OF THE UNITED STATES FOR INTERNATIONAL ECONOMIC POLICY," n.d.). It functions conferring to a financial structure that presents the feature of socialism and capitalism. The mixed economy safeguards private assets and consents to an amount of economic liberty in capital usage, but similarly allows government interventions in financial matters to realize social objectives for the good of the public.

A mixed economic structure possesses features of centrally planned financial regulation by the government and those of a free market. Market economies are manipulated in various ways in a mixed economy ("ECONOMICS AND META-ECONOMICS," n.d.). Governments may impose controlling restraints on intended businesses in the private market. Then, Private institutions may need government-approved permits to accomplish particular tasks. The government might ban some of the activities altogether and may also possess public assets or offer community services then implement tax plan or grants to alter the rate indicators in the market. Prices are allowed to fluctuate depending on supply and demand in a mixed economy market.

Additionally, several private dealings are permissible but under settings compliant to the government's objectives. The U.S. government has restricted regulation over the country's finances with governing boundaries, like certifying or prohibition of particular undertakings ("ECONOMIC ORGANIZATION OF THE UNITED STATES FOR INTERNATIONAL ECONOMIC POLICY," n.d.). The mixed economy in the United States allows for healthy competition and distribution of goods and services to where they ought to be.

China and the United States are the leading economies worldwide in Purchasing Power Parity (PPP) and nominal methods. The United States leads in the nominal while China is at the peak in the PPP after it overtook the United States in 2014 (Chan et al., 2011). In 2019 the two countries shared 40.75% and 34.27% of total world's GDP in both nominal and PPP footings, correspondingly ("Decomposition of GDP per capita relative to the USA, %," 2008). Compared to the countries that come third, the GDP of the two countries is way higher, making them the only competition in the world. The United States has unemployment rates of between 18 to 20% ("Youth unemployment rate and unemployment rate, United States regions, 2013: United States," 2014). China's unemployment rate has remained at 3.61 since 2018 (Chan et al., 2011). The inflation rate in China was 2.07 as of 2018 ("Unemployment rates: total," n.d.). The main reason for economic inflation in China is expansionary financial strategies and increasing wages. The U.S. has low inflation rates; for instance, it was 1.8% in 2019 (Chan et al., 2011). China has transitioned its economy to market-oriented from centrally-planned structure; this has seen the country's economy grow to be the largest by PPP and second after the U.S. by nominal GDP.

The United States economy is powered by productive natural assets, a well-built infrastructure, and high efficiency. The nation also has the third-largest population in the world, which fuels its economy too. The mixed market economy system in the country allows for Equivalent Sharing of power, increased productivity in private organizations, harmless dock for poverty, increased job ventures, the autonomy of private firms to prosper by themselves and better chance for the government to endorse excellent strategies; This explains the low inflation rates and employment rates in the country, making it the largest economy.

References

Chan, P. S., Pollard, D., & Chuo, S. (2011). Corporate Ethics: China vs. USA. International Business & Economics Research Journal (IBER), 6(2). https://doi.org/10.19030/iber.v6i2.3340Decomposition of GDP per capita relative to the USA, %. (2008). https://doi.org/10.1787/eco_surveys-deu-2008-graph1_6-en

ECONOMIC ORGANIZATION OF THE UNITED STATES FOR INTERNATIONAL ECONOMIC POLICY. (n.d.). Foreign Economic Policy for the United States. https://doi.org/10.4159/harvard.9780674367333.c5

ECONOMICS AND META-ECONOMICS. (n.d.). VALUING NATURE?. https://doi.org/10.4324/9780203441220_chapter_2

Unemployment rates: total. (n.d.). https://doi.org/10.1787/173873044425Youth unemployment rate and unemployment rate, United States regions, 2013: United States. (2014). https://doi.org/10.1787/9789264215009-graph195-en