The French Economy
(graphics not included)
Macroeconomics from any country will be complicated and France is no exception. There are various factors which will give the analyst an Idea as to how healthy a countries economy is. The first, and arguably the most important, factor is GDP. GDP, also known as gross domestic product, refers to the total output of a country at any one time. Below is a time series of the GDP of France from 1970 until 2008.
As you can see the French GDP seems to never be in the same place twice or, at least, has not held a steady course in the last 38 years. This is common when looking at GDP time series from different economies. It is clear that the business cycles for the last four decades shows that France has experienced many economic ‘booms’ and has also experienced many recessions. The booms can be explained by looking at certain macroeconomic models.
Above you will see a copy of the aggregate supply and demand model. I am using this as an example to show how the GDP can be affected. You will notice that the AD1 line has shifted right to AD2. This is an example of demand pull inflation. Demand pull inflation is caused by an increase in expenditure in the economy. The expenditure is made up of consumers spending on domestic products, investment, government spending and exports. When the expenditure rises the demand for products also rises pulling the aggregate demand line to the right. When expenditure decreases the line shifts to the left. This is linked very closely to Inflation. Below you will see a time series of the inflation in France between 1970 and 2008.
As well as Demand-pull inflation there is cost-push inflation. This works when costs rise. Instead of the demand curve moving this causes the supply curve to move left. Firms respond to this by raising there prices and with doing so they are passing the costs onto the consumer. Obviously this has not been such a problem in France in recent years. Inflation dropped significantly between 1982 and 1987 and has stayed low since.
The last important factor to consider is the unemployment rates. Below is the time series relating to the unemployment in France between 1970- 2008. From the time series below you can see that unemployment levels had been rising in France from 1970 until 1996 apart from a slump between 1988 and 1990.
In conclusion, regardless of Macropoland’s current economic condition, it is fair to say that it is all part of the business cycle. The business cycle has three parts: peak, trough, and peak. The peak is the date that the recession starts. In Macropoland’s case, the peak would be at the beginning of 1973, its trough somewhere between 1973 and 1974, and then its peak again at 1974. In the second scenario, Macropoland is either at its trough, where it is about to head up again because of its low inflation rate, or it is at its expansion, on its way to heading to its next peak.
Quarterly GDP changed a good amount during 2000-2001. Although the numbers changed throughout both years, there was not a recession. A recession is when there are two consecutive down terms. If there was a recession, the easy money policy would be put into affect. This is discussed along with the Discount Rate.
At the conclusion of the French Revolution, King Louis XVI and absolutist monarchy would be found headless, Republicanism would be found instilled into the government of France, and, soon after, the French people would be under not a king but an emperor, Napoleon Bonaparte. While some would argue that there was not any significant progress accounting that going from a king to an emperor is no different, change within the financial system of France remains to stand noteworthy, putting into context the substantial situation the country w...
Major inequities, inflation and lack of food, very minimal reforms, rising aspirations of middle classes -bourgeoise. Among 23 million Frenchmen, there were 400,000 who formed the nobility -and army officers and clergy.
The fluctuations of economic growth are known as the business cycle. The GDP is a useful indication and measurement of the fluctuations of economic contractions. The measurement of GDP can be approached from three angles: value added by industry, final expenditures, and factor incomes (2008). The first angle measures the value added created by industry; the output less and inputs purchased from other producers. The second angle measures expenditures by consumers, businesses on investment goods, government on services and goods, and foreigners for exports; minus expenditures by domestic residents on imports. The last angle measures incomes generated in production, operating surplus generated by business and compensation of employees (2008). The GDP does not remai...
3) In 1789 under the reign on Louis XVI France faced an inefficient government, which was nearly bankrupt. There was a shortage of food and the food they had was incredibly expensive.
Inflation refers to the annual increase in the prices of goods and services in a nation. An increase in inflation causes a unit of money to buy less stuff while a reduction
France engages in quite a few secondary economic activities such as manufacturing, machinery and transport equipment production, aircraft production, and pharmaceutical items. This part of the economy makes up about 26% of France’s gross domestic product and 25% of its labor force (“CIA 2001”, 1). Manufacturing plays the largest role out of all of the secondary economic activities with a contribution of 16% to the gross domestic product. Behind it are the construction and energy generation companies which account for 4% and 3% of the gross domestic product (“Economic Structure”, 1).
Marking a significant beginning stage of the economic downturn was the Seven Years’ War, a battle that saw few positive achievements, but several losses both in terms of land and money, which had been acquired through loans that would establish France’s first significant debt. The reign of Louis XVI would further this debt, while also creating a greater divide between the estates of France by placing the heavy burden of repaying much of the new debt on the poorest class of France, the Third Estate. Participation in another war, only ten years prior to the French Revolution would create even more debt for France as they entered the American War of Independence, again with funding from loans that would need to be paid soon thereafter. Throughout this period of debt creation within France, society worsened in many ways due to the inability of the nation, from royalty to the Third Estate, to evolve economically, socially and agriculturally. With this overall sense of decline throughout France, a nearly unanimous desire amongst France’s Third Estate, the most populous, was to pa...
France is a country located in Western Europe. It borders Andorra, Germany, Luxembourg, Monaco, Spain, Belgium, Switzerland and Italy. The country of France originally known by the name of Gaul or Gallia is a country with a rich history and culture. The Celts originally occupied and dominated that lands of Gaul. In the year of 121, Julius Caesar led the Roman Army into the country of Gaul. He won a decisive victory over the Celtic tribes that once dominated the area. This area became the first province of the Roman Empire. The Romans would rule the region until the Third Century. Savage Barbarian Forces from the East began invading the area in the Third Century. Uncharacteristically, a group of Franks, Visigoths and Vandals began fighting the Romans for control of the regions of Gaul. Seeing this happening, the people of Gaul began forming alliances with local lords in order to receive protection from the Barbarian invaders. The territory of Gaul eventually fell to the Franks after the Romans retreated. The barbaric people of the Franks were Germanic people from Eastern Europe lead by a man named Clovis. Clovis then became the first Frankish King of the newly Latin named Francia, which is France in the modern day French language.
In order to assess the current state of the economy, the examination of important economic indicators or variables has always played a vital role in the understanding of the complex economic systems we live in. The analysis of these economic variables studied by many, not only has served as a tool to evaluate the current economic performance of a country, but also has allowed experts to envisage and continue the pavement of an economy's road. Currently, some economic variables have had favorable improvements indicating a general good outlook for the economy for the following months, requiring a further individual analysis and comparisons in order to foresee crisis or successes.
In an economy, aggregate demand (AD) accounts for the total expenditure on goods and services. It has five constituents; Consumer expenditure (C), Investment expenditure (I), Government expenditure (G), Export expenditure (X) and import expenditure (M), This gives us: AD= C+I+G+X-M. Aggregate supply (AS) on the other hand is the total supply of goods and services in the economy. Increasing AD and decreasing AS both cause demand-pull and cost-push inflation respectively. Demand pull inflation occurs when aggregate demand (AD) continuously rises, detailed in Figure 1. The AD curve continuously shifts to the right, as demand continuously increases, from point a to b to c. This consequently causes an increase in the price level of goods and services. As prices rise, costs of production also increase, causing producers to reduce output (a decrease in aggregate supply (AS)), shifting the AS curve to the left and leading to yet another increase in prices, (t...
In 18th Century the peasant population increased dramatically. This growth in population increased the demand for more land. Land was being divided into smaller and smaller sections to cope with this problem. Eventually some sections of land were not even enough for a peasant to support his own family. The wars in America left France in huge debt. To try and pay this debt the nobility increased taxes on the peasants, which further increased their resentment towards the nobility. Poor harvests in 1787 and 1788 led to a food shortage. The peasants could barely feed themselves let alone pay taxes. The peasants started to threaten violence if their situation wasn't improved. There was an increased competition from British textile manufacturers. This left many people without jobs, and a huge increase in unemployment.
As an aftereffect of inflation, the purchasing power of a unit of money falls. For instance, a pack of gum that costs $1 and if inflation rate is 2% then in a given year will cost $1.02 the following year. As products and services require more cash to buy, the implicit value of that currency falls.
The Gross Domestic Product (GDP) is the total market value of in a country’s output. The GDP is the total market value of all final goods and services produced by factors in within given period of time that located in the country doesn’t matter they are citizens or foreign-owned companies. Hence, the GDP is the best way to measure the country economy.