Question: How do you relate GDP with the demand?
Answer: An increase in demand from any of the sectors, which require production of goods and service which results in GDP increases. Because firm would producers more and to produce more it has to use more materials, and need to purchasing them from other firms, which in turn this firm would produce more. To produce more firms also usually hire more labor, and labor spend their earnings. So, A positivity in the market and in the country’s economy. If potential resources are more utilized it would result in reducing the GDP gap (potential GDP vs actual GDP).
Question: How reducing the GDP Gap can result in increase in inflation?
Answer: Depending on the degree of GDP growth or GDP gap narrowing (Difference between potential GDP and Actual GDP), inflation may increase. Because material supplies become tighter (because of high demand) and the labor market strengthens (as labor resources already being near fully utilized), which put upward pressure on production costs.
Question: Why corporate profit is more important than revenue for corporate bonds?
Answer: Corporate bonds, are serviced from profits of the firm and not from the revenue figures.
Question: How does corporate revenue and profit are related to the GDP?
Answer: We can say that corporate profits, in the aggregate or overall, rise and fall with macro-economic activity. But corporate revenue follows the macro-economy’s path. Because in GDP, it measures the output of goods and services, which a firm can produce. Hence, you can say more GDP means more sales or revenue.