Fundamentals of Macroeconomics
JoRenie Armstrong
ECO/372
March 23, 2015
Yohannes Mariam Fundamentals of Macroeconomics
Fundamentals of Macroeconomics economic principles apply and affect the entire economic system that encompass the world. Macroeconomics directly impact every part of our government and every individual’s quality of life. The health of the nation’s economy affects our economy. A few areas that determine economic health are the gross domestic product (GDP), gross national product (GNP) the unemployment rate, the inflation rate, and taxes. The Principle areas of Macroeconomics covered in this paper examines the flow of resources between three entities - government, businesses, and individual households. Their interconnecting relationships of how various economic activities connect and affect one another verbalized from the author’s perspective.
Households
Daily acts, such as buying groceries has an enormous impact on our economy. Purchasing groceries on a regular basis directly affect the GDP. Consumer spending is a driving force of a nation’s economic health. The Gross Domestic Product (GDP) defined is the final monetary measurement of a country’s production activities, of goods and services, bought by the end users in a given period. Purchasing groceries for consumption is part of the GDP collection process. This factor is how individual household purchases affect the nation’s economy.
In times of a recession, consumers spending decreases. Consumers curtail their spending and go into the savings mode. The practice of saving versus spending affects other areas of business, such as production. The switch to a saving pattern causes a decline in production of goods. The reduction of production resulting from reduced spending causes layoffs in the agriculture industry. Further decreases in the supply of goods (groceries) become evident by