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Fundamentals of Macroeconomics

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Fundamentals of Macroeconomics
ECO372

The business cycle is like a car, it must have several key components to operate and if one part fails it must be fixed to continue forward. The gross domestic product (GDP) is known as the price of all goods and services a country produces in a given time. It is equal to government spending, investments and consumer spending minus the value of imports. The GDP is part of the moving car, but it needs more to keep going. The real GDP is known as taking inflation and summing the total of a certain time period. It is the number reached by valuing the sum of all productive activity with countries borders. Purchasing powers can be seen because of the comparison within the year. Just because a product is selling for the same amount of money it doesn’t mean the company is making the same profit. There are many factors to consider when making a product and getting it from one place to another. The nominal GDP is a figure used without inflation making the GDP appears higher than it actually is. This can be confusing because a company could have made 10 Percent more this year but if inflation is gone up 3 percent it was actually 7 percent. The unemployment rate is the labor force divided by the number of unemployed workers who are able and willing to work, but just cannot find a paying job. The unemployment rate is not measured the same by different countries depending on situations. The inflation rate is known as the term used to describe the rise in economics. The rise is the price of the goods and services. There are three types of inflation the monetary inflation is about the money supply expansion. This type of inflation is when the federal government prints money that is not backed by gold or silver. The second is reducing demand and increasing supply by price inflation. The last is real inflation its causes would impact

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