Fundamental Macroeconomics Essay

Submitted By studymode9054
Words: 854
Pages: 4
Open Document
Fundamentals of Macroeconomics
Fundamentals of Macroeconomics

Principles of Macroeconomics ECO372
July 22, 2013
University of Phoenix
The assignment this week consists of two parts. Part one requests terms described by using our own interpretations, while the second part is a discussion summarizing the affects of some economic activities on the government, households, and businesses.
Gross Domestic Product (GDP) is the single most used instrument in measuring economic activity. The GDP is the total and final value of all goods and services produced in a market, measured over a one year span. GDP may also be referred to as the market value of final output. There are two types of GDP, real and nominal. Real GDP is referred to as the GDP that has been adjusted for inflation costs. Nominal GDP means the value was calculated at today’s existing prices. In order to calculate real GDP, you must have the nominal GDP and subtract the cost of inflation. It seems as that throughout Macroeconomics, nominal is always current or existing while real is adjusted for inflation. The unemployment rate is calculated as a percentage that is used to describe the amount of the population who want to and can work, but who do not have jobs. The inflation rate is the continual rise of the price level. It is important to note that inflation deals with the continual rise, it is not a one-time jump in prices. The overall increase in your year to year grocery bill is due to inflation, not the fact that Kool-Aid is 20 cents a packet this month when it was half that last month. Interest refers to the amount of money you must pay back in addition to your principle loan amount. Any interest rate is a certain amount calculated over a period of time. The interest rate macroeconomics deals with is the one that the federal government uses to control our economy. This key rate will determine whether or not a loan is affordable. In times of economic strife, this rate is lowered so borrowing will cost less and help boost the economy. In turn, when the economy is doing better, this rate is raised to reduce borrowing. Interestingly enough, a low unemployment rate will lead to a high inflation rate as well as a high interest rate.
Economic activities, such as purchasing groceries, massive layoffs, and tax decreases affect households, businesses, and the government in several ways. Food purchases, in the form of groceries, are probably one of the most important economic activities that Americans can do. First of all, groceries feed Americans. So, the price of food and the taxes associated with buying them, takes money away from Americans. The businesses that sell groceries make profit off of those groceries and are able to provide Americans with jobs (to buy the groceries.) The tax the business receives and holds for the consumer to be given to the government helps to fund the various government activities and programs that sustain America. As the price of groceries goes up, consumers are forced to buy less and therefore eat less, or eat less healthy. If taxes are raised, consumers are yet again forced to purchase less. Raising taxes or price levels hurt the businesses as well as the government because they ultimately make less.
Massive layoffs are scary for all three categories. When businesses are forced to lay off their workers, they plan on
Show More

Related Documents: Fundamental Macroeconomics Essay

Fundamentals Of Macroeconomics

Fundamentals of Macroeconomics ECO 372 August 7, 2014 Fundamentals of Macroeconomics Macroeconomics is the study of the economy as a whole. What happens in the economy as a whole is based on individual decisions that are made during economic activities (Colander, 2010). Economic activities can be defined as actions that involve the production, distribution and consumption of goods and services at all levels within a society ("Business Dictionary", 2014). Purchasing of groceries, a massive…

Words 1043 - Pages 5

Fundamentals Of Macroeconomics

Fundamentals of Macroeconomics Cassandra Burns ECO/372 January 12, 2014 Godwin Quashigah Part 1 Gross Domestic Product (GDP) - is defined as the market worth of every merchandise and assistance inside a nation in a stage of measure. Real GDP- report for alteration in the value stage, a modified amount assessed to Nominal GDP. Nominal GDP- When a GDP number that has not been modified for price increase. Unemployment Rate- The ratio is an amount of…

Words 329 - Pages 2

Fundamentals Of Macroeconomics Paper

Fundamentals of Macroeconomics Paper Kate Eriksen ECO372 June 2, 2014 David Euler Fundamentals of Macroeconomics Paper “Macroeconomics is the study of the economy as a whole” (Colander, 2013, p. 6). Colander explains farther that macroeconomics looks into inflation, unemployment, business cycle, and growth (2013, p. 6). For the purpose of this paper, I will be explaining how certain economical activities affect four principle components of any economy, households, firms (also known as businesses…

Words 531 - Pages 3

Essay on Fundamentals of Macroeconomics

Fundamentals of Macroeconomics Michael Medley Eco/372 June 11, 2012 David Euler In order for people to understand macroeconomics they have to distinguish between individual effects on the economy and the whole economy. Macroeconomist concentrate on the economy as a whole. Fluctuations in activities associated with the market can have drastic ramifications on the economy because the changes affect how governments, households, and businesses deal with the fluctuations within the economy. The…

Words 1018 - Pages 5

Fundamentals Of Macroeconomics Paper

Fundamentals of Macroeconomics Zachary Madrid ECO/372 July 20, 2015 Joseph Krupk Fundamentals of Macroeconomics Through our online textbook, I come to understand that macroeconomics is the study of the overall economy that provides an analysis of problems with bussiness cycles, inflation, unemployment, and growth. Macroeconomics targets the accumalated links between everyday household consumption ties in with income and how our government policies affect growth of society. Through this…

Words 374 - Pages 2

Fundamentals Of Macroeconomics Paper

Fundamentals of Macroeconomics Paper Principles of Macroeconomics/ ECO/372 Fundamentals of Macroeconomics “Macroeconomics is the study of the economy as a whole. It considers the problems of inflation, unemployment, business cycles, and growth” (Colander, 2013, p.5). Economic Activities Economic activities go on day in and day out. Throughout the United States, we have consumers buy, sell and trade. We have many economic activities from an employee requesting a loan on their profit sharing plan…

Words 778 - Pages 4

Fundamentals of Macroeconomics Essay

Fundamentals of Macroeconomics Part I Gross domestic product (GDP) In 1991 GDP became official measure of the economic health of US. Prior to this US used the gross national product (GNP), which did not provide accurate measure of economy of the US because they counted the people who worked for US abroad. With GDP it became focused on analyzing the production, investments, imports, and exports of US economy and it also includes the measure of employment rate. GDP could either be positive or negative…

Words 782 - Pages 4

What Are The Fundamental Of Macroeconomics

Fundamentals of Macroeconomics • Gross domestic product (GDP)- Gross domestic product is a country’s economic indicator. GDP measures the total output of services and products from boarder to boarder of the country. GDP is a measuring of the economy within a time period of the country. • Real gross domestic product (RGDP)- This adjusts inflation measures of the real value of products, services, and goods produced in a year. Real gross domestic product accounts for changes in price levels to…

Words 890 - Pages 4

Essay on Fundamentals of Macroeconomics

Fundamentals of Macroeconomics ECO/372 01/02/2012 Introduction The fundamentals of macroeconomics have many key terms that will help you gain a better understanding of the activities involved in economics. These activities affect government, households, and business that impact our economy and shape our society. The first term is gross domestic product (GDP), which is an indicator of a country’s standard of living. GDP is the…

Words 808 - Pages 4

Notes On Fundamentals Of Macroeconomics

Fundamentals of Macroeconomics Rudy Burns ECO/372 February 25, 2013 Laurence Hagan Fundamentals of Macroeconomics Part I * GROSS DOMESTIC PRODUCT (GDP) - The total value of the goods and services produced by the people of a nation during a year, excluding the value of income earned in foreign countries ("Gross Domestic Product," 2013). * The GDP is the total cost of finished goods and services produced. That means products that are manufactured as components to a finished are not…

Words 747 - Pages 3