The French Economy
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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.
Inflation occurs when consumers are spending like crazy, and “the central banks flood the system with too much money,” (DPE, 37). They do so through
During the course of this paper, we hope to give the reader a better understanding of the economic forces at play that influence this Nation's GDP, in therefore its economic health.
...ing that the trend continues, but at a slower rate, economic and consumption growth will stall due to the aging population, inadequate productivity benefits, and the increasing value of limited resources, particularly oil. Annual GDP expansion in France is predicted to be 1.5% from 2008 to 2030, judging from 2.1% from 1980 to 2008 if there is a lack of government reforms and significant policy changes.
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.
Morrisson, Christian, and Wayne Snyder. "The Income Inequality of France in Historical Perspective." European Review of Economic History (2000): 59-83. Print.
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.
To begin, the war experienced in France was deadly because it had a major cause of deaths, and the loss destroyed the people of France. Because of the many losses the country’s birthrate dropped from the years and most of the of the children became orphans. The people that were ruined from the war had psychological problems due to that fact that they seen many horrible events happening during the war. Because of the war France didn’t have much land after the war so they wouldn’t be able to build anything from the land. France agricultural production went down and there was food shortage during that period. Inflation weakened the social class in France. France had consult with their colonies and importing good from other countries. The war experience
One of the four West European trillion-dollar economies, France matches a growing services sector with a diversified industrial base and substantial agricultural resources. Industry generates one-quarter of GDP and more than 80% of export earnings. The government retains considerable influence over key segments of each sector, with majority ownership of railway, electricity, aircraft, and telecommunication firms. It has been gradually relaxing its control over these sectors since the early 1990s. The government is slowly selling off its holdings in France Telecom, in Air France, and in the insurance, banking, and defense industries. Meanwhile, large tracts of fertile land, the application of modern technology, and subsidies have combined to make France the leading agricultural producer in Western Europe. A major exporter of wheat and dairy products, France is practically self-sufficient in agriculture. The economy expanded by 3% in 1998, following a 2.3% gain in 1997. Persistently high unemployment still poses a major problem for the government. France has shied away from cutting exceptionally generous social welfare benefits or the enormous state bureaucracy, preferring to pare defense spending and raise taxes to keep the deficit down. The JOSPIN administration has pledged both to lower unemployment and trim spending, pinning its hopes for new jobs on economic growth and on legislation to gradually reduce the workweek from 39 to 35 hours by 2002. France joined 10 other EU members to launch the euro on 1 January 1999.
Compared to other countries, France’s economy is the fourth largest in the world. France is a very industrialized nation, yet it has kept some of the cultural characteristics that contribute to its old-world charm. The economy is “exceptionally diversified” (“Economic Structure”, 1). It produces everything from aircrafts to pharmaceuticals.
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 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.
Inflation is the rate at which the purchasing power of currency is falling, consequently, the general level of prices for goods and services is rising. Central banks endeavor to point of confinement inflation, and maintain a strategic distance from collapse i.e. deflation, with a specific end goal to keep the economy running smoothly.
As a result of this economic growth families will begin to feel more confident and will begin to spend more of their money instead of saving it because they believe that will receive a pay raise or will find a better job. (Amadeo, 2016) Borrowing also increases when economic activity is high people begin to borrow from banks and other places because they feel that the government has been doing a great job managing the economy. (Amadeo, 2016) As we have seen in 2008 people should never get to confident in the economy because our economic bubbles are used to crashing when they are doing very well and it’s never really the people’s fault it’s the governments. Although inflation begins to rise when the economy is doing great one of the things that is known to bring prices down is competition among businesses. Competition is great because one company will attempt to sell a product for a cheaper price than another company which results in lower prices the same as you see with cell phones and automobiles. Higher prices can also be caused by technological innovations when people are expecting a new product the producer can sell it for a higher price because they know that consumers will spend almost any amont of money to obtain that product. (Amadeo, 2016) Higher demand for new products will increase employment to meet those demands and inflation will rise which will benefit the economy tremendously. Whenever the price level increases, spending must also increase to be able to buy the same amount of goods and
Inflation is one of the most important economic issues in the world. It can be defined as the price of goods and services rising over monthly or yearly. Inflation leads to a decline in the value of money, it means that we cannot buy something at a price that same as before. This situation will increase our cost of living.
There are many factors that affect the economy, inflation is one of them. Basically inflation is risingin priceof general goods and services above a period.As we see value of money is not valuable for the next years due to inflation. Today every country has facing inflationary condition in their economy.GDP deflator is a basictool that tells the price level of final goods and services domestically produced in an economy.GDP is stand for gross domestic product final value of goods and services, Furthermore GDP deflator shows that how much a change in the base year's GDP relies upon changes in the price level. . Inflation in contrast, how speedy the average prices intensity is increases or changes above the period so the inflation rate define the annual percentage rate changes in the level of price is as measure by GDP deflator more over GDP deflator has a advantage on consumer price index because it isn’t only based on a fixed basket of goods and services. It’s a most effective inflation tool to identify the changes in consumer consumption and newly produced goods and service are reflected by this deflator. Consumer price index (CPI) is also measure the adjusting the economic data it can also be eliminate the effects of inflation, through dividing a nominal quantity by price index to state the real quantity in term.