Fundamental of Macroeconomics Paper

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Fundamentals of Macroeconomics Paper

Definitions
Gross Domestic Product
GDP is the value of goods and services which is released quarterly by the Federal Reserve. This includes the goods and services manufactured by that country that calculates the state of a country’s economy. This is 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 believe that measuring the living standards with the GDP is a poor means to measure because it only measures market activities. Nominal GDP

A measurement of the total dollar value over the duration of one year that includes consumer spending, the value amount of inflation for products, and services manufactured in a country. Real GDP

Gross domestic product is the final measurement of goods and services that were produced for one year and were adjusted for price changes. The GDP calculations can determine the actual inflation figures. Unemployment rate

The unemployment rate is calculated by dividing the number of unemployed individuals within a country by the labor force (Colander, 2010). When the economy is in a state of recession, the unemployment rate will increase. These figures will indicate how the country is doing economically.

Inflation rate
The inflation rate is determined by the continual increase in the price level of goods and services (Colander, 2012). It is a percentage increase of the price level of goods and services within the economy that affects...
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