Eco 372 Week 2 Individual Paper
Week 2 Fundamental Macroeconomics
October 22, 2012
ECO/372
There are several factors that affect our economy, gross domestic product (GDP), real GDP, nominal GDP, unemployment rate, inflation rate, and interest rates. All of these factors have influences over how we purchase groceries, weather there will be massive layoffs of employees, and decrease in taxes.
Gross domestic product is the market value of final goods and services produced within a country in a given period. Which this is commonly considered an indicator of the standard of living within a country. Real GDP on the other hand is measure of the value of economic output that adjust for price changes. Nominal GDP is a gross domestic product figure that has not been adjusted for inflation. Unemployment rate is the measure of the prevalence of unemployment and is calculated as a percentage by dividing the number of unemployed people by the individuals that are currently in the labor force. Inflation rate is the percentage rate of change in price levels over time, usually one year. An interest rate is the rate which interest is paid by a borrower for the use of money that they borrow from a lender. All of these factors are related to our everyday lives and how we manager our money, what we spend our money on, and when we spend our money.
Buying groceries sounds like a simple task but when you are on a budget it can be pretty stressful. The cost of groceries affects the government because this is a good that is produced and sold within our country; which affects GDP, real GDP, and nominal GDP. This is directly related to consumer spending and in times of a recession consumers pull back on their spending and go into savings mode. When consumers go into savings mode this affect every type of business because production is down and this could cause layoffs. Buying groceries affects households because thousands of people struggle everyday to provide for their families and when the cost of goods
October 22, 2012
ECO/372
There are several factors that affect our economy, gross domestic product (GDP), real GDP, nominal GDP, unemployment rate, inflation rate, and interest rates. All of these factors have influences over how we purchase groceries, weather there will be massive layoffs of employees, and decrease in taxes.
Gross domestic product is the market value of final goods and services produced within a country in a given period. Which this is commonly considered an indicator of the standard of living within a country. Real GDP on the other hand is measure of the value of economic output that adjust for price changes. Nominal GDP is a gross domestic product figure that has not been adjusted for inflation. Unemployment rate is the measure of the prevalence of unemployment and is calculated as a percentage by dividing the number of unemployed people by the individuals that are currently in the labor force. Inflation rate is the percentage rate of change in price levels over time, usually one year. An interest rate is the rate which interest is paid by a borrower for the use of money that they borrow from a lender. All of these factors are related to our everyday lives and how we manager our money, what we spend our money on, and when we spend our money.
Buying groceries sounds like a simple task but when you are on a budget it can be pretty stressful. The cost of groceries affects the government because this is a good that is produced and sold within our country; which affects GDP, real GDP, and nominal GDP. This is directly related to consumer spending and in times of a recession consumers pull back on their spending and go into savings mode. When consumers go into savings mode this affect every type of business because production is down and this could cause layoffs. Buying groceries affects households because thousands of people struggle everyday to provide for their families and when the cost of goods
References: Colander, D.C. (2010). Macroeconomics (8th ed.). Boston, MA: McGraw-Hill/Irwin http://www.forbes.com