Fundamentals of Macroeconomics Paper
Daniel Souza
ECO/372
March 31, 2014
Professor John Ilokwu

Fundamentals of Macroeconomics Paper
Covered in this paper is the explanation of fundamental terms used in macroeconomics and the analysis of the resulting affects different economic activities impose upon government, households, and business. Prior to diving the dissection of jargon and investigating the influence of activity, a basic definition of macroeconomics is beneficial. Colander (2010) writes, “Macroeconomics is the study of the economy as a whole. It considers the problems of inflation, unemployment, business cycles, and growth” (pg. 15). Now that a basic meaning has been provided, six key terms used in macroeconomics are detailed below.
Key Terms Used in the World of Macroeconomics
There exists many important nomenclatures used within the study and application of macroeconomics. This section explains six basic components that are essential in beginning to understand macroeconomics. Gross Domestic Product (GDP), Real GDP, Nominal GDP, Unemployment Rate, Inflation Rate, and Interest Rate are covered.
Gross Domestic Product (GDP)
The juggernaut known as Gross Domestic Product (GDP) refers to the financial appraisal relative to the total spectrum of completed goods and work performed inside a country, during a specified period of time (Investopedia, 2014). An annual computation is most common. The calculated GDP is a monetary picture of the total private consumption, public consumption, government outlays, investments, and the difference of exports minus imports (Investopedia, 2014).
Real GDP
Real GDP is a tool used by economists when measuring growth (Colander, 2010). Declared in expenditure of a given year, real GDP is the calculated total worth of product and services produced by an economy (Colander, 2010). This form of GDP can account