Economic Activities

ECO/372 Principles of Macroeconomics
June 24, 2013
Johnny Shull

Abstract
This paper will review and describe gross domestic product, real gross domestic product, interest rates, inflation and unemployment. This paper will also review the decrease in taxes, massive layoff, and the purchasing of groceries and how they affect households, businesses as well as the government. Everything what happens within an economy sets off a chain reaction whether its big or small. One negative reaction could lead to a whole line of negative reactions which impacts consumers, businesses, and the government and vice versa for the positive impacts.

Economic Activities Gross domestic product (GDP) measures the complete market worth for products and services sold and bought by organizations and consumers within an economy in a years’ time. Nominal GDP is a form of real GDP but the difference is that nominal GDP creates room for inflation with in the economy. Interest rate is the percentage of added to an amount that has to be paid back but there are two kinds of interest rates which are nominal and real. Nominal interest rates are those that are inflated and cause your principle balance to be more than what it originally is. Real interest rate is the actual amount of what you would be repaying due to the inflation (Colander, 2010). Economic changes are measured in real GDP which reflects the market value of the products that are sold within the economy for the period of one year; this is a result of people producing and selling goods. Inflation rate is a direct result of continuous price increases; this reflects the continuous price increase of everything that is to be sold in the economy. Inflation could render the expansion of the economy because it makes it hard for the government to reduce things such as unemployment (Colander, 2010).