Fundamentals of Macroeconomics Paper
Fundamentals of Macroeconomics Paper
ECO/372
Fundamentals of Macroeconomics Paper
Some of the terms that are frequently used in economics are; gross domestic product (GDP), real GDP, nominal GDP, unemployment rate, inflation rate, and interest rates.
Gross domestic product is the money value of the nation’s productivity. GDP is the value of all finished goods and services produced within the country’s border. Real GDP is the market value of the final goods and services produced in a year. Real GDP means that it was adjusted for inflation so it will show a more accurate figure. Without real GDP our market values would look a lot higher than they really were and this helps us when trying to see what our productivity was. Nominal GDP is also known as the current dollar amount. It is the gross domestic product that has not been adjusted for inflation. Nominal GDP can be misleading because it does not adjust the inflation amount. For example if the nominal GDP figure showed that it shot up 10% but inflation has been 5% the real GDP has really only increased 5%.
The unemployment rate is a percent of people who are not currently working but are willing and able to work or currently seeking. There are three different types of unemployment. The unemployment rate is figured by dividing the number of unemployed people by the number of people who are working and then multiplied by 100. Inflation rate is when prices for goods and services are on the rise. Inflation results in higher prices for the same amount goods and services one could have bought the year before for a lower price. Inflation gives high prices and lower purchasing power from consumers. The dollar amount becomes less than what it previously was.
An interest rate is a percentage of the principle, which is the total amount of a loan, given by a lender for the use of an asset. The asset could either be a house or vehicle. An interest rate is usually based on an annual basis so this is also
ECO/372
Fundamentals of Macroeconomics Paper
Some of the terms that are frequently used in economics are; gross domestic product (GDP), real GDP, nominal GDP, unemployment rate, inflation rate, and interest rates.
Gross domestic product is the money value of the nation’s productivity. GDP is the value of all finished goods and services produced within the country’s border. Real GDP is the market value of the final goods and services produced in a year. Real GDP means that it was adjusted for inflation so it will show a more accurate figure. Without real GDP our market values would look a lot higher than they really were and this helps us when trying to see what our productivity was. Nominal GDP is also known as the current dollar amount. It is the gross domestic product that has not been adjusted for inflation. Nominal GDP can be misleading because it does not adjust the inflation amount. For example if the nominal GDP figure showed that it shot up 10% but inflation has been 5% the real GDP has really only increased 5%.
The unemployment rate is a percent of people who are not currently working but are willing and able to work or currently seeking. There are three different types of unemployment. The unemployment rate is figured by dividing the number of unemployed people by the number of people who are working and then multiplied by 100. Inflation rate is when prices for goods and services are on the rise. Inflation results in higher prices for the same amount goods and services one could have bought the year before for a lower price. Inflation gives high prices and lower purchasing power from consumers. The dollar amount becomes less than what it previously was.
An interest rate is a percentage of the principle, which is the total amount of a loan, given by a lender for the use of an asset. The asset could either be a house or vehicle. An interest rate is usually based on an annual basis so this is also
References: Petroff, J. (2002). Demand and Supply Microeconomics. Retrieved from www.peoi.org. Investopedia. (2012). Retrieved from www.investopedia.com.