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Fundamentals of Macroeconomics Paper

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Fundamentals of Macroeconomics paper

ECO/372

September 10, 2012

First Part

The gross domestic product is a measure of country’s value:

Goods produced
+
Service rendered
+
Government Spending
+
(Exports)-(imports)
= GROSS DOMESTIC PRODUCT

Real Gross Domestic Product equals to the measure of the output of the Gross domestic Product that is acclimated for inflation or deflation.

The Nominal Gross Domestic Product differs specially on the aspect that the change in price is not accounted.

The unemployment rates is the quantity of people that are able to work due to their age, studies or other conditions but are currently unemployed.

Inflation rate is the variation that can be positive or negative of goods or service. Most of the time when the inflation is negative it’s also call deflation but sometimes it’s common to see a negative inflation.

Interest rate is the annual % divided by the quantity owed each month on borrowed capital.

Second Part

On the second part of the paper some things that are explained in the first part will make a complete sense when they become related with real life examples. I will show the link between the following economic activities:

Purchasing of groceries
Massive layoff of employees
Decrease in taxes

The economy of a nation is a large number of factors linked each other and strictly related that easily become an ecosystem just as in the nature. All these items need to be monitored and adjusted to maintain a balance that allow all the parts of these system survive and if possible improve.
When consumers shop groceries at a supermarket or anywhere using their money they actually jumpstart the system or on the other side finish a cycle. For somebody perform a productive task he must know that on the other side there’s a consumer...

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