Case Discussion # 1 submitted by Omer Malik, Asim Mustafa, Amat-ul-Mateen, Section-B, Batch-42, University of Management & Technology

GDP Article
GDP Drops at 3.8% Rate as Spending Falls
WASHINGTON.The U.S economy shrank

Issue:
The most significant issue was that the economy has been shrinking day by day. Since GDP is an important figure for any economys growth. Recorded every year 3.8% decline is seen in the market. Most of the labor is jobless. New avenues are feeble. The economy is facing such a critical phase which has not seen in 26 years. Serious steps have to be taken for the overall growth of economy. After shrinking U.S economy at the end of 2008, the recession became deep in 2009. GDP fell seasonally 3.8% in the 4th quarter of 2009 as mentioned before. The U.S President Obama said: the decrease in GDP is a continuing disaster for Americans working families.

Causes of decline:
There are numerous causes which worsen the situation of the economy. 1. 2. 3. 4. 5. 6. Credit crunch (crisis) Oil prices rise Mortgage finance and poor in recovery Jobs are finished Consumer market is in depression GDP is source of all goods produced in country, so macro level has declined due to all such factors. 7. Money spends on War on terrorism. 8. Tax reforms 9. Inventories rose at the end of 2008 but demand went down. 10. Excess of inventory was the main cause of disturbed economy because demand was low and the companies got stuck with the unwanted stock.

Course: Macro Economics

Case Discussion # 1 submitted by Omer Malik, Asim Mustafa, Amat-ul-Mateen, Section-B, Batch-42, University of Management & Technology

Strategies taken:
1. 2. 3. 4. 5. 6. 7. Tax rebated (discount) for consumers. Created job opportunities. Tax system revived Spending less on war against terrorism Oil prize stabled, consumption of oil must not on necessary items. Exports increased President Obama gave the strategic solution of the problem by announcing the creation of a middle class working familys task force. He said labor movement is the part of the solution not the problem, the need is to enhance the overall demand and support the financial sector. ______________________________________

Course: Macro Economics