...Fundamentals of Macroeconomics Paper Part 1: Describe the following terms in your own words. Gross domestic product (GDP) is the indicator of the economic health of a country. Also a measure of the dollar value or goods produced at a given time period. Real GDP is nominal GDP adjusted for inflation. Real GDP is also what is important to a society because it measures what is really produced. Nominal GDP is a gross domestic product (GDP) number that has not been adjusted for inflation. Unemployment rate are rates at which people are either looking for a job or just simply does not have a job. It is measured by the number of people reportedly in the country at one time adjusted by those who are eligible to work and are not. Inflation rate are rates at which the economies prices are adjusting upward or downward. Prices increase and decrease and the measures show the strength or power. Interest rate is tax added back to the payback (what you owe). Fundamentals of Macroeconomics Paper Macroeconomics deals with such issues as national economic output and growth, unemployment, recession, inflation, foreign trade, and monetary and fiscal policy. Using macroeconomics we will study and explore the economy at the aggregate level because it is concerned with the workings of the whole economy or large sectors of it. The sectors include our government, households, and businesses. There are a multitude of different economic activities that affect...
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...Fundamentals of Macroeconomics ECO-372 Principles of Macroeconomics University of Phoenix Feb 6, 2015 Fundamentals of Macroeconomics Macroeconomics is the study of the economy as whole rather than individual markets. Macroeconomics further explores issues and considers problems such as inflation, unemployment, business cycles, and economic growth. “Macroeconomics focuses on aggregate relationships such as how household consumption is related to income and how government policies can affect growth” (Colander, 2013). Individuals purchasing groceries, large corporation layoffs and the effects of the government reducing taxes, all play into and have impacts on the economy. As these activities are examined closer, we see the effects caused by the government, households, and business decisions nationwide on a daily basis. Purchasing Groceries When entering a grocery store how often does one think, “Where do all these items come from” or what effect purchasing these products has on the nation’s economy? Of course, not all the goods you see on the shelves have come solely from the United States. Something most people do not recognize is that a simple purchase at the grocery store may affect the global economic system. Walking around the local store you may only see a few employees, but behind the scenes hundreds, maybe even thousands have been involved supplying products...
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...Fundamentals of Macroeconomics ECO 372 – Principles of Macroeconomics University of Phoenix Facilitator: Kenneth Lethere July 10th, 2012 Fundamentals of Macroeconomics Intro: In the vast universe of economics, making sense of the different terminology used regularly in the business can be a difficult and time consuming task, but it will eventually improve one’s chances for success with the different paces that the purchaser’s interest will peak and bottom out, and how that can affect not just the particular retailer, but the economy as a whole when customer interest is at all time lows and money is harder and harder to find. Gross Domestic Product or GDP: Gross Domestic Product, or “GDP,” is the official measure of goods and services that are produced in a specified period, within a country. Real GDP can measure the value of goods and services that are shown in the price graphs of a base year. Nominal GDP can measure the value of goods and services that are shown in current prices. The unemployment rate is the average percentage of people living on unemployment benefits when put against the percentage of people employed. The inflation rate is a measurement of the percentage rate of price level changes or increases of price indexes, usually over a period of one year. An interest rate is the rate that is set by a lender to pay back money that the borrower has requested. Real GDP: There are many economic activities affected by different areas that impact...
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...Fundamentals of Macroeconomics ECO/372 Macroeconomics studies the aggregate behavior of the economic system as opposed to microeconomics whose concentration is on subcategories or individuals and how they make decisions. The use of macroeconomics can have a direct impact on the choices made for the nation’s economic benefit. When employing macroeconomics an economist can determine why products have decreased or increased in price. It analyzes many factors that play part in the health of the economy. This study, though, complicated can be employed to encourage different government policies that develop a certain affect for instance; increased government spending can create jobs and increase employment this is called expansionary policy. Decreased government spending can have the opposite affect this is contractionary policy. Macroeconomics Terms There are different terms associated with macroeconomics are important to know and understand. One known term is Gross Domestic Product (GDP). GDP is the value of all finished goods and services produced in a certain country during a certain time frame. GDP measures a country’s standard of living. Two words associated with GDP are real GDP and nominal GDP. Real GDP is the measure of the gross domestic product value adjusted for change in prices; this can be owing to inflation. Nominal GDP uses current prices on products and services (Colander, 2010). Unemployment rate is another important part of macroeconomics it indicates...
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...Fundamentals of Macroeconomics Macroeconomics is one of the most general fields in economics. Macroeconomics studies the behavior structure, performance, and decision making of the whole economy including changes in unemployment, nationwide income, gross domestic product, and inflation. Macroeconomics concentrate on the progress in the economy as a whole, whereas microeconomics focuses on issues that influence the decisions made by companies and individuals. There are various forms of economic data that make up the fundamentals of macroeconomics, including Gross Domestic Product (GDP), Real GDP, Nominal GDP, Unemployment Rate, Inflation Rate, and Interest Rate. These various form can affect the flow of resources among different entities. To fully understand macroeconomics it is important to understand the following terms: Gross Domestic Product (GDP), Real GDP, Nominal GDP, Unemployment Rate, Inflation Rate, and Interest Rate. Gross Domestic Product focuses on the country monetary value of all finished goods and services produces in a specific time period. According to "Investopedia" (2009) “the gross domestic product is one of the primary indicators used to gauge the health of a country's economy” (para. 1). Real GDP and Nominal GDP are two terms associated with Gross Domestic Product. Real GDP concentrates on the market value of final goods and services produced using prices from a base year. Nominal GDP focuses on the total value of all goods and services produced in a...
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...Fundamentals of Macroeconomics Weston Keene ECO/372 1/16/2014 SAMUEL ADELUSIMO Fundamentals of Macroeconomics part 1 • Gross Domestic Product (GDP) – Gross domestic product is how economist measures the growth with change in the market value of final goods and services produced in the market. • Real GDP- how the economy growth is measured by real gross domestic product. Per capital divided by the total population. • Normal GDP- Normal GDP changes when the supply levels of the product changes which can change the price of an item. Typically figures for GDP do not change like normal GDP. • Unemployment Rate- The unemployment rate is the rate of people unemployed in a certain area. • Inflation Rate- is the persistent rate of change in general goods in services in the economy. • Interest rate- is a rate that the borrow pays back to the lender for loaning them the money. Part 2 There are many factors that pertain to the fundamentals of macroeconomics when purchasing groceries; massive lay offs of employees, and decrease of taxes. Six of the main factors that play a role are gross domestic product, real GDP, Normal GDP, unemployment rate, inflation rate, and interest rate. Which not only affect government, household, and businesses. Purchasing groceries is a very typical weekly activity for the most common household. The inflation rate can affect the prices in most all groceries one example can be the cost of living...
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...Fundamentals of Macroeconomics ECO/372 Principles of Macroeconomics Fundamentals of Macroeconomics Macroeconomics is a type of economics focused on performance and structure of the economy as opposed to individual markets. That focus macroeconomics includes evaluating growth. Clear understanding of macroeconomics starts with the interpretation of basic concepts and definitions. Definitions such as gross domestic product (GDP), differentiation between nominal and real GDP as well as rates of inflation, interest, and unemployment are key terms to become familiar with. Macroeconomic Terms Gross domestic product or GDP is the total market value of recognized products, goods, and services over a given period of time. The recognized piece pertains to the fact that some goods or services could be “under the table” or non-taxable. GDP is manipulated by under the counter sales, illegal drug sales, non-reported sales, and other illegal activity. GDP is segmented into categories of real and nominal. The difference between real GDP and nominal GDP is that real GDP is adjusted for inflation whereas nominal GDP is GDP calculated at existing prices or value at current market price. GDP is an accurate measure of market activity but not welfare. The happiness element is very difficult to measure. Unemployment occurs when people are without work and actively seeking work. The unemployment rate measures the prevalence of unemployment and is calculated by dividing the number of unemployed...
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...Fundamentals of Macroeconomics April Sheffler Principles of Macroeconomics ECO/372 January 24, 2014 Gaminie Meepagala Terms There are a few terms that should be defined before exploring macroeconomics. • Gross domestic product (GDP) - refers to the total market value of the goods and services that are produced in a country in a year. • Real GDP- refers to the value of the goods and services that are produced in a country in a year, after being adjusted for inflation. • Nominal GDP- refers to the value of the goods and services that are produced in a country in a year, before the adjustments of inflation. • Unemployment rate - refers to the number of people in a country who do not have a job but are able to work. • Inflation rate - refers to how fast the prices of goods and services in a country are rising. The higher the rate is, the less the public’s purchasing power is. • Interest rate - refers to how an additional fee that is charged by a lender when money is borrowed. The higher the rate is, the more money will be charged to the borrower. Introduction Now that some of the fundamental terms of macroeconomics are defined, it is time to explore some of the economic activities of macroeconomics. “Macroeconomics is the study of an economy at the aggregate level, and is concerned with the workings of large sectors of the economy” (Colander, D., 2010). Fundamental activities of macroeconomics in relation to sectors of the economy include the purchasing of groceries...
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...Fundamentals of Macroeconomics ECO 372 Fundamentals of Macroeconomics Fundamentals of Macroeconomics Paper – Part 1 * Gross Domestic Product (GDP) – The monetary value of all the finished goods and services produced within a country’s borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory. * Real GDP – An inflation-adjusted measure that reflects the value of all goods and services produced in a given year, expressed in base-year prices. * Nominal GDP- A gross domestic product (GDP) figure that has not been adjusted for inflation. * Unemployment Rate – The percentage of the total labor force that is unemployed but actively seeking employment and willing to work. * Inflation Rate – The rate at which the general level of prices for goods and services is rising, and, consequently, purchasing power is falling. * Interest Rate – The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets. Interest rates are typically noted on an annual basis, known as the annual percentage rate (APR). Fundamentals of Macroeconomics Paper – Part 2 There are many examples of economic activity, and each activity has a different effect on government, households, and businesses. Purchasing groceries has a huge effect on the government. Taxes...
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...Fundamentals of Macroeconomics Angelica Austria ECO/372 January 16, 2014 Sarah Allen Fundamentals of Macroeconomics Macroeconomics is the study of economics involving phenomena that affects an entire economy, including inflation, unemployment, price levels, economic growth, economic decline and the relationship between all of these. While microeconomics looks at how households and businesses make decisions and behave in the marketplace, macroeconomics looks at the big picture - it analyzes the entire economy (Grimsley, n.d.). The economy is affected by several factors; the inflation rate, the unemployment rate, interest rates, and gross domestic product (GDP), nominal GDP, and real GDP. Gross domestic product determines the health and size of the country’s economy. GDP represents the market value of all the goods and services produced within a country in a particular. Nominal GDP calculates the changes in market prices based on what happened the current year while real GDP evaluates using market prices of some base year. Inflation rate measures the change in price of goods and services over a period. Unemployment rate is a percent of the number of people, who are unemployed, but is actively seeking for employment and is available to work. All these factors relate to our everyday lives and how we make financial decisions on how, what, and when to spend our money. We live in the world where we depend on the economy to provide us job or business opportunities...
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...Fundamentals of Macroeconomics ECO/372 Principles of Macroeconomics January 6,2014 Fundamentals of Macroeconomics Economics proposes that we live in a world of scarcity. We do not have enough resources or time to meet our needs. Economics studies how we allocate our resources to achieve those needs. Macroeconomics deals with the entire components of a country’s economy. Macroeconomics can be called the “big picture” of economics at a national level. Rather than focusing on individual markets, macroeconomics looks at production and consumption of the economy as a whole. The most important basics of macroeconomics include gross domestic product, real gross domestic product, nominal gross domestic product, inflation rates, interest rates, and unemployment (Colander, 2010). PART I The gross domestic product (GDP) is used as a way to determine a country’s economic health. It is basically the amount of services and products that are produced over a period of time, usually a year. To measure the GDP in its simplest form one would add up what everyone earned in a year, or add up what everyone spent. In a perfect world, the two total results would be about the same. The real gross domestic product is adjusted for inflation. To adjust for price changes, the real GDP is measured using the prices from a specific year. For example if real GDP’s from various years are measured, each year uses the quantities from its respective year. However, the prices are all from the base year, only...
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...Fundamentals of Macroeconomics Macroeconomics has many different terms that are used to describe specific measurements and groups that comprise an Economic system as a whole. It allows us to understand topics such as economic growth, inflation rate and interest rate, changes in employment and unemployment, our trade performance with other countries and the success or failure of government economic policies. Macroeconomics also shows us how examples of economic activities affect Government, households, and businesses. Gross domestic product (GDP) The Gross Domestic Product (GDP) is used to measure the economy’s goods and services used in a specific period. These measurements are calculation in two ways it’s population income or the populations’ expenditures. The most common way to measure is by using the expenditures method. The expenditures consist of four mechanisms such as government purchases, consumptions, investments, and net Exports. The dollar amount spent on good and services we as individuals consume are added to the amount business invest or spend to make those goods and services. With the exceptions of welfare and social security the government also contributes to the goods and services used to measure the GDP. We then take the goods and service we exports to other countries and subtract the goods and services we purchased and use from others countries to come up the GDP formula C+I+G+(X-M) = the Gross Domestic Product of an economy. Real Gross...
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...Fundamentals of Macroeconomics ECO 372 June 7, 2012 Fundamentals of Macroeconomics This paper will consist of two parts in which will apply and define some fundamentals of macroeconomics. Part one will explain six terms; gross domestic product (GDP), real GDP, nominal GDP, unemployment rate, inflation rate, and finally interest rate. Part two will consist of describing how three economic activities, such as purchasing of groceries, massive layoff of employees, and decrease in taxes affect the three main sectors of the United States economy. The three main sectors are divided into categories, businesses, government, and households. Part two will also describe the flow of resources for each economic activity from one entity to another. Part I: Macroeconomic Terms Gross Domestic Product (GDP) Colander stated that the gross domestic product is, “the total market value of all final goods and services produced in an economy in a one-year period” (p. 183). The GDP is essentially separated into four expenditure categories; the cumulative monetary value of all finished goods from private and public consumption, the sum of government spending, the sum of the country’s spending on capital, and net exports. The net exports are calculated as total worth of exports minus total worth of imports. GDP consists of supplies and services generated...
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...Fundamentals of Macroeconomics The following terms will be define, gross domestic product (GDP), real GDP, unemployment rate, inflation rate, and interest rate. The circular flow diagram will be introduced to describe the representation and interactions with households, government, and businesses. The current economic conditions of the world affects individuals. The most valuable economic indicators will be recognized as affecting the organization along with reasoning of the effect. Part One: * Gross Domestic Product (GPD)- The GDP has two approaches, income and expenditure. The income approach is measured by the income earned by national household during the year. The expenditure approach is the total at amount spent on goods and services produced in a nation by households, company's, the government as well as foreigners. * Real GDP- Real GDP is the change that shows the value of goods and services produced during a given year but is expressed in base year prices. To calculate real GDP, the nominal GDP is divided by a price index then multiplied by 100 (Colander, 2008) * Nominal GDP- Nominal is the opposite of real GDP. This is a figure that has not been updated for inflation or changes during a specific year. * Unemployment rate- This is the rate of the total work force, who are able to work, is unemployed. These people are seeking jobs and are willing and able to work. Depending on the economic situation of the country, the...
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...Fundamentals of Macroeconomics Paper Introduction Before actually being able to grasp all that economics has to offer it is important to understand the terms and concepts that are frequently used in economics. Some of the main terms that are essential to comprehend are: gross domestic product (GDP), real GDP, nominal GDP, unemployment rate, inflation rate, and interest rate. These terms are used frequently within the economic world and being able to understand the definition and be able to apply it in real life situations is important. It is also essential to think of real life situations and how a lack of money or an excess of money may affect the given situations. Buying groceries, massive layoffs, decrease in taxes, how would all of these things affect the government, households and businesses? Definitions What is gross domestic product (GDP)? This is simply the current market value of all of a countries products and services. It only accounts for the products and services within that country and made by that country. It does not account for any goods or services that they may have in other countries. What is real GDP? This is the value of all products and services within a country, however, unlike the above definition this takes into account inflation. So, real GDP is the value of all goods and services produced within a year, within a specific country, and it takes into account the inflation. What is nominal GDP? This is the value of all products and services...
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