Fundamentals of Macroeconomics
Benson James
ECO 372
Fundamentals of Macroeconomics
08 October 2013
The gross domestic product (GDP) is defined as the market value of all goods in any country at any specific time. The gross domestic product is frequently used to establish a country’s wealth or standard of living. Even though the GDP is supposed to determine a country’s economic health, many nonbelievers think the gross domestic product does not account for the underground economy. An underground economy would consist of transactions that are no reported to the government. The first thing that comes to mind as an example would be restaurant servers. Not all restaurants require servers to claim all of their tips. So well then gross domestic product is calculated, these transactions are not taken into consideration. The gross domestic product is determined by finding the total consumer(C), investment (I), and government spending (G), plus the value of exports (X), minus the value of imports (M). The gross domestic product equation looks like this GDP= C+I+G+(X-M).
Nominal GDP is referred to a figure of the gross domestic product that has not yet accounted for inflation. This term is also often identified as current dollar gross domestic product. The nominal GDP will always be higher than what the gross domestic product really is because of inflation. Nominal gross domestic product is usually used to calculate the entire production in a country.
When someone thinks of unemployment, they think of someone with no job or income. However, there are different ways to look at unemployment. There are people who are unemployed but are not trying to look for a job. Then there are people who are unemployed but continuously looking for employment. When determining the unemployment, we take the total number of people who are unemployed but aggressively looking for some type of employment. The lower the unemployment rate is the better off the economy
ECO 372
Fundamentals of Macroeconomics
08 October 2013
The gross domestic product (GDP) is defined as the market value of all goods in any country at any specific time. The gross domestic product is frequently used to establish a country’s wealth or standard of living. Even though the GDP is supposed to determine a country’s economic health, many nonbelievers think the gross domestic product does not account for the underground economy. An underground economy would consist of transactions that are no reported to the government. The first thing that comes to mind as an example would be restaurant servers. Not all restaurants require servers to claim all of their tips. So well then gross domestic product is calculated, these transactions are not taken into consideration. The gross domestic product is determined by finding the total consumer(C), investment (I), and government spending (G), plus the value of exports (X), minus the value of imports (M). The gross domestic product equation looks like this GDP= C+I+G+(X-M).
Nominal GDP is referred to a figure of the gross domestic product that has not yet accounted for inflation. This term is also often identified as current dollar gross domestic product. The nominal GDP will always be higher than what the gross domestic product really is because of inflation. Nominal gross domestic product is usually used to calculate the entire production in a country.
When someone thinks of unemployment, they think of someone with no job or income. However, there are different ways to look at unemployment. There are people who are unemployed but are not trying to look for a job. Then there are people who are unemployed but continuously looking for employment. When determining the unemployment, we take the total number of people who are unemployed but aggressively looking for some type of employment. The lower the unemployment rate is the better off the economy