Essay about Fundamentals of Macroeconomics

Submitted By charles8564
Words: 951
Pages: 4
Open Document
Fundamentals of Macroeconomics Charles Alexandre University of Phoenix ECO/372
October 25, 2012
Instructor: Kirk Maringi

Fundamentals of Macroeconomics
Gross Domestic Product The Gross Domestic Product or GDP of a nation is said to be the combined total price of all the goods and services that are produces during a given period of time. The GDP is of great importance for economic analyst because it is used as an indicator to determine how well or bad the economy is doing. In essence, when people work to create a product or provide a service, they earn income or they get paid. The GDP is basically the total amount of what people or companies make by buying or selling goods and services during a year.
Real GDP Real GDP is the Gross Domestic Product that results after adjusting prices for inflation. During any given year, prices fluctuate up or down, therefore the GDP should be adjusted to reflect current market prices minus inflation ("Investopedia", 2012). The result is what we know as real GDP. Real GDP takes into consideration the price changes in the market and therefore is considered to be more accurate.
Nominal GDP The nominal gross domestic product is a GDP that has not been adjusted to account for inflation. It is also referred to as current dollar GDP ("Investopedia", 2012). The nominal GDP of a nation can be deceiving because it reflects a GDP of current prices but it doesn’t account for inflation. This could indicate an economic situation that is better than what it really is. For example, a nominal GDP increase of 9% with an inflation rate of 5% will result in a real GDP of only 4%.

Unemployment Rate The unemployment rate of a nation is considered the percentage of people that are physically able and willing to work, but are not successful in finding a job (Colander, Chapter 7, 2010). That percentage doesn’t account for children or those who are too sick to work, incarcerated, etc. It only refers to individuals of working age who are diligently looking for work but are still unemployed. Unemployment rate is usually a good indicator of how well an economy is doing. In an economy that is strong and in the process of growing, unemployment rates are going to be low. On the contrary, if the economy of a nation is doing poorly, unemployment rates are usually going to be higher.
Inflation Rate Inflation is defined as the “continual rise in the price level” (Colander, 2010, Chapter 7). The price level is also known as an index that economist use to measure all the prices throughout an economy. It is understandable that prices fluctuate throughout a year based on supply and demand, season, etc; that doesn’t always lead to inflation. Sudden one time spikes in prices do not necessarily mean a rise in inflation; it must be a constant rise without prices coming down to previous levels.
Interest Rate Interest rate is the amount that is charged or paid for the borrowing or lending or money, or any asset considered financial in nature. Some examples of interest rates include those charged by credit card companies, banks, department stores, etc. A company that requires you to pay back 15 cents for every dollar you borrow, in essence has an interest rate of 15 percent.

Flow Resources between Government/Households/Business When consumers purchase groceries it creates a cycle where resources are exchanged from one entity to the other. We began by the household or individual making the purchase, he or she must render some form or payment for the good being purchased; usually in the form of money. Money is given to the store making the sell. The increase in money allows that entity or business to pay for cost
Show More

Related Documents: Essay about Fundamentals of Macroeconomics

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

Fundamental Macroeconomics Essay

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…

Words 854 - Pages 4

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