...Fundamentals of Macroeconomics Lucas Gonzalez Course/Number March 23, 2015 Dr. Yi Fundamentals of Macroeconomics Each of the economic activities that will be discussed in this assignment has its way to effect government, households and businesses. Each activates will have my personal example so the paper may seem more past tense phrases. Now, this is just some of the activities but the economic has much more than just mentions in this article unfortunately I will not be covering everything just and overall picture for the assignment itself. The three examples that I will be using are purchasing of groceries, massive layoff of employees and decrease in taxes. Economic Activates When we buy groceries from the stores, this can affect the government by the amount of taxes collected from the actual purchase. The more a person buys in groceries, the more money the government can collect taxes. Every household is affected when buying groceries; depending on the household’s collective income will determine how much a family can buy in supermarkets. Of course, we all know families with a higher earning potential tends to buy more items when going groceries storing. The results in this are that the more one family can spend the more taxes collected by the government. For example in my personal life, my wife needed to make a career change due to the work environment was starting to make her sick. So she ended up leaving a month later and started her new job but it...
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...Fundamentals of Macroeconomics ECO/372 Macroeconomics studies the aggregate behavior of the economic system as opposed to microeconomics whose concentration is on subcategories or individuals and how they make decisions. The use of macroeconomics can have a direct impact on the choices made for the nation’s economic benefit. When employing macroeconomics an economist can determine why products have decreased or increased in price. It analyzes many factors that play part in the health of the economy. This study, though, complicated can be employed to encourage different government policies that develop a certain affect for instance; increased government spending can create jobs and increase employment this is called expansionary policy. Decreased government spending can have the opposite affect this is contractionary policy. Macroeconomics Terms There are different terms associated with macroeconomics are important to know and understand. One known term is Gross Domestic Product (GDP). GDP is the value of all finished goods and services produced in a certain country during a certain time frame. GDP measures a country’s standard of living. Two words associated with GDP are real GDP and nominal GDP. Real GDP is the measure of the gross domestic product value adjusted for change in prices; this can be owing to inflation. Nominal GDP uses current prices on products and services (Colander, 2010). Unemployment rate is another important part of macroeconomics it indicates...
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...Fundamentals of Macroeconomics Macroeconomics is one of the most general fields in economics. Macroeconomics studies the behavior structure, performance, and decision making of the whole economy including changes in unemployment, nationwide income, gross domestic product, and inflation. Macroeconomics concentrate on the progress in the economy as a whole, whereas microeconomics focuses on issues that influence the decisions made by companies and individuals. There are various forms of economic data that make up the fundamentals of macroeconomics, including Gross Domestic Product (GDP), Real GDP, Nominal GDP, Unemployment Rate, Inflation Rate, and Interest Rate. These various form can affect the flow of resources among different entities. To fully understand macroeconomics it is important to understand the following terms: Gross Domestic Product (GDP), Real GDP, Nominal GDP, Unemployment Rate, Inflation Rate, and Interest Rate. Gross Domestic Product focuses on the country monetary value of all finished goods and services produces in a specific time period. According to "Investopedia" (2009) “the gross domestic product is one of the primary indicators used to gauge the health of a country's economy” (para. 1). Real GDP and Nominal GDP are two terms associated with Gross Domestic Product. Real GDP concentrates on the market value of final goods and services produced using prices from a base year. Nominal GDP focuses on the total value of all goods and services produced in a...
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...Fundamentals of Macroeconomics Macroeconomics has many different terms that are used to describe specific measurements and groups that comprise an Economic system as a whole. It allows us to understand topics such as economic growth, inflation rate and interest rate, changes in employment and unemployment, our trade performance with other countries and the success or failure of government economic policies. Macroeconomics also shows us how examples of economic activities affect Government, households, and businesses. Gross domestic product (GDP) The Gross Domestic Product (GDP) is used to measure the economy’s goods and services used in a specific period. These measurements are calculation in two ways it’s population income or the populations’ expenditures. The most common way to measure is by using the expenditures method. The expenditures consist of four mechanisms such as government purchases, consumptions, investments, and net Exports. The dollar amount spent on good and services we as individuals consume are added to the amount business invest or spend to make those goods and services. With the exceptions of welfare and social security the government also contributes to the goods and services used to measure the GDP. We then take the goods and service we exports to other countries and subtract the goods and services we purchased and use from others countries to come up the GDP formula C+I+G+(X-M) = the Gross Domestic Product of an economy. Real Gross...
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...Fundamentals of Macroeconomics ECO/372 Principles of Macroeconomics Fundamentals of Macroeconomics Macroeconomics is a type of economics focused on performance and structure of the economy as opposed to individual markets. That focus macroeconomics includes evaluating growth. Clear understanding of macroeconomics starts with the interpretation of basic concepts and definitions. Definitions such as gross domestic product (GDP), differentiation between nominal and real GDP as well as rates of inflation, interest, and unemployment are key terms to become familiar with. Macroeconomic Terms Gross domestic product or GDP is the total market value of recognized products, goods, and services over a given period of time. The recognized piece pertains to the fact that some goods or services could be “under the table” or non-taxable. GDP is manipulated by under the counter sales, illegal drug sales, non-reported sales, and other illegal activity. GDP is segmented into categories of real and nominal. The difference between real GDP and nominal GDP is that real GDP is adjusted for inflation whereas nominal GDP is GDP calculated at existing prices or value at current market price. GDP is an accurate measure of market activity but not welfare. The happiness element is very difficult to measure. Unemployment occurs when people are without work and actively seeking work. The unemployment rate measures the prevalence of unemployment and is calculated by dividing the number of unemployed...
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...Fundamentals of Macroeconomics April Sheffler Principles of Macroeconomics ECO/372 January 24, 2014 Gaminie Meepagala Terms There are a few terms that should be defined before exploring macroeconomics. • Gross domestic product (GDP) - refers to the total market value of the goods and services that are produced in a country in a year. • Real GDP- refers to the value of the goods and services that are produced in a country in a year, after being adjusted for inflation. • Nominal GDP- refers to the value of the goods and services that are produced in a country in a year, before the adjustments of inflation. • Unemployment rate - refers to the number of people in a country who do not have a job but are able to work. • Inflation rate - refers to how fast the prices of goods and services in a country are rising. The higher the rate is, the less the public’s purchasing power is. • Interest rate - refers to how an additional fee that is charged by a lender when money is borrowed. The higher the rate is, the more money will be charged to the borrower. Introduction Now that some of the fundamental terms of macroeconomics are defined, it is time to explore some of the economic activities of macroeconomics. “Macroeconomics is the study of an economy at the aggregate level, and is concerned with the workings of large sectors of the economy” (Colander, D., 2010). Fundamental activities of macroeconomics in relation to sectors of the economy include the purchasing of groceries...
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...Fundamentals of Macroeconomics ECO/372 Principles of Macroeconomics January 6,2014 Fundamentals of Macroeconomics Economics proposes that we live in a world of scarcity. We do not have enough resources or time to meet our needs. Economics studies how we allocate our resources to achieve those needs. Macroeconomics deals with the entire components of a country’s economy. Macroeconomics can be called the “big picture” of economics at a national level. Rather than focusing on individual markets, macroeconomics looks at production and consumption of the economy as a whole. The most important basics of macroeconomics include gross domestic product, real gross domestic product, nominal gross domestic product, inflation rates, interest rates, and unemployment (Colander, 2010). PART I The gross domestic product (GDP) is used as a way to determine a country’s economic health. It is basically the amount of services and products that are produced over a period of time, usually a year. To measure the GDP in its simplest form one would add up what everyone earned in a year, or add up what everyone spent. In a perfect world, the two total results would be about the same. The real gross domestic product is adjusted for inflation. To adjust for price changes, the real GDP is measured using the prices from a specific year. For example if real GDP’s from various years are measured, each year uses the quantities from its respective year. However, the prices are all from the base year, only...
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...Fundamentals of Macroeconomics Paper Introduction Before actually being able to grasp all that economics has to offer it is important to understand the terms and concepts that are frequently used in economics. Some of the main terms that are essential to comprehend are: gross domestic product (GDP), real GDP, nominal GDP, unemployment rate, inflation rate, and interest rate. These terms are used frequently within the economic world and being able to understand the definition and be able to apply it in real life situations is important. It is also essential to think of real life situations and how a lack of money or an excess of money may affect the given situations. Buying groceries, massive layoffs, decrease in taxes, how would all of these things affect the government, households and businesses? Definitions What is gross domestic product (GDP)? This is simply the current market value of all of a countries products and services. It only accounts for the products and services within that country and made by that country. It does not account for any goods or services that they may have in other countries. What is real GDP? This is the value of all products and services within a country, however, unlike the above definition this takes into account inflation. So, real GDP is the value of all goods and services produced within a year, within a specific country, and it takes into account the inflation. What is nominal GDP? This is the value of all products and services...
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...Fundamentals of Macroeconomics Xxxxxx xxxxxxxxx ECO-372 March 16, 2015 Fundamentals of Macroeconomics Astrophysicists will tell you that energy cannot be destroyed, only changed. While in the process of researching the fundamentals of macroeconomics and how all the different sectors work with, for, and even against each other at times, I decided to focus on the concept of circular flow. Like energy, value can only be changed or repurposed, but it never actually disappears. A circular flow model of the macroeconomy containing three sectors (business, household, and government) and three markets (product, factor, and financial) that illustrates the continuous movement of the payments for goods and services between producers and consumers, with particular emphasis on taxes and government purchases. There are other circular-flow models, including two and four sector circular flows, but the three-sector, three-market circular flow model illustrates the key roles that the government, household, and business sectors play in the macroeconomy. It expands the circular flow model by illustrating how taxes are diverted from consumption expenditures to the government sector and then used for government purchases. It illustrates that taxes do not vanish from the economy, but are merely diverted (AmosWeb, 2015). The Three Sectors The three macroeconomic sectors represented in this model are: * Household Sector, which includes all people, using economic decision-making to satisfy...
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...Fundamentals of Macroeconomics ECO 372 June 7, 2012 Fundamentals of Macroeconomics This paper will consist of two parts in which will apply and define some fundamentals of macroeconomics. Part one will explain six terms; gross domestic product (GDP), real GDP, nominal GDP, unemployment rate, inflation rate, and finally interest rate. Part two will consist of describing how three economic activities, such as purchasing of groceries, massive layoff of employees, and decrease in taxes affect the three main sectors of the United States economy. The three main sectors are divided into categories, businesses, government, and households. Part two will also describe the flow of resources for each economic activity from one entity to another. Part I: Macroeconomic Terms Gross Domestic Product (GDP) Colander stated that the gross domestic product is, “the total market value of all final goods and services produced in an economy in a one-year period” (p. 183). The GDP is essentially separated into four expenditure categories; the cumulative monetary value of all finished goods from private and public consumption, the sum of government spending, the sum of the country’s spending on capital, and net exports. The net exports are calculated as total worth of exports minus total worth of imports. GDP consists of supplies and services generated...
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...Fundamentals of Macroeconomics Paper Jeremy Noah ECO372 May 7, 2012 Watson Ragin Fundamentals of Macroeconomics Paper In the following, there will be a breakdown of different terms that are involved in the macroeconomic conversation. There will also be a few different examples that affect government, households, and businesses. An explanation of how each scenario affects these entities will be given as well. Economic Terms The first term that will be described is gross domestic product. This term takes a couple different actions and puts them into a final amount. When a country makes investments, exports goods, and imports goods, there will be a final amount of a positive amount or negative amount that comes back as profit or loss to it. Along with this amount, the entire private and public sector companies report their profits and losses and these numbers are figured into the gross domestic product figure. Real gross domestic product refers to a more inflated figure when it comes to an accurate number. Basically, normal gross domestic product refers to a base year such as 2010. If prices have gone up since then and someone is looking for a real gross domestic product number for 2012, then the adjustment for inflated prices will affect the normal gross domestic product number to accurately reflect the real amount. Nominal gross domestic product is the next term. This refers to the gross domestic product minus the inflation factor. This would mean that if the nominal...
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...Fundamentals of Macroeconomics It is much easier to think to yourselves, “That has nothing to do with me,” or “Why should I care,” isn’t it? Many people go through life oblivious and not concerned about the situations around them. That especially holds true when in regards to the economy. Some believe the economy is a governmental issue and it is the government’s responsibility to maintain it. What many people do not realize is the fact that their actions also have an affect on how the rest of society lives and survives. If careless and inattentive, serious damage can be done to the economy that adversely affects many sectors of society. Every action, from purchasing groceries to massive layoffs and decreases in taxes, has a consequence. The purchasing of groceries can have positive and negative effects on government, households, and businesses. For government, depending on the locality, there might not be an imposed sales tax on groceries of a certain type, so there is no revenue generated. There is also the cost of regulation of goods provided and the importation of certain scarce goods. For households, the fact that groceries can be provided is a good thing, considering there are households that do not have the ability to do so, so they have some kind of income. That does follow that the income is leaving their pockets when they purchase those goods. The exchange of income for goods helps businesses put income in their pockets also. Money isn’t created, it is...
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...Fundamental of Macroeconomics Paper July 23, 2012 Dr. Lori Geddes, P.h.D Introduction This paper will be divided into two distinct parts the first part will consist of the 6 terms used to describe macroeconomics and second part will provide 3 examples of economic activities. The purpose of part 1 is to define six terms of macroeconomics which include: Gross domestic product, Real GDP, Nominal GDP, Unemployment rate, Inflation rate and Interest rate. Part 2 will discuss how the following economic activities: purchasing of groceries, massive layoff of employees and decrease in taxes affects the government, households and businesses. Macroeconomic Terms: Gross Domestic Product The Gross domestic product which is referred to as the GDP for short, is best defined as the as the main indicator used to calculate the state of a country’s economy. The GDP is the total market value of all products and services produced in an economy within the time period of one year (Colander, 2010). The GDP is categorized into four expenditure categories: consumption, investment, government spending and net exports. A factor to keep in mind is that when the GDP is calculated it does not include intermediate goods (Colander, 2010). The intermediate goods are eliminated from the GDP either by measuring only the final sale or by measuring only value added (Colander, 2010). Economists express that the GDP may be a poor means to...
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...Fundamentals of Macroeconomics The Gross Domestic product is the market value of the goods and services that are produced for the economy in a one year’s time frame. The gross domestic product measures the economy and helps to get a broader picture of economy. Real Gross Domestic Product is the value after products are produced and sold for that period. Real GDP show the earned income for the economy after all sales are final. The focus is to get the economy growing which will increase output and income. Growth is always good for the state of the economy. The Nominal GDP analyzes current market prices, when there are changes in market prices that take place in the current year. This is usually is due to inflation and deflation. Unemployment Rate is the total number of people that are without employment. The formula to measure the percentages unemployment rate is number of people unemployed divided by the number of people in the workforce in the US. You must be actively seeking employment and able to work to fall under the unemployment stats. You do not count the discouraged workers in the unemployment rates because they aren’t seeking employment. Inflation Rates is when price levels rise in the economy. Inflation is the guide to macroeconomic policies. Our government can’t stop inflation without causing a recession, but when unemployment is reduced it will stimulate growth and help increase inflation. Interest Rates are an annual percentage of principal when the use...
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...Fundamentals of Macroeconomics The following terms represent some of the fundamental indicators used by economists to express economic conditions and fluctuations in economic conditions. Gross Domestic Product (GDP) Gross domestic product is the value of all the finished goods and services produced within a country's borders in a specific time period. In the United States, as in most countries, GDP is calculated on an annual basis. GDP measures a nation's productivity. GDP does not necessarily reflect a relative standard of living. Real GDP Real GDP expresses GDP in terms of base-year prices. A base year is the first in a mutually agreed upon series of years. Price level indexes in the base year are assigned an arbitrary value. Price levels in subsequent years in the series are expressed in values relative to the base year. This process provides for a more meaningful comparison of one year to another within the series. Nominal GDP Nominal GDP refers to the raw data produced by annual GDP calculations. These data are not adjusted for inflation. Because of the effects of inflation on economic indexes, nominal GDP does not accurately reflect changes in GDP compared to previous years. Unemployment Rate The unemployment rate reflects the percentage of the population that is able and willing to work and is looking for work, but is unable to find work. Inflation Rate The inflation rate is the rate at which the price of goods and services rises. Increasing inflation...
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