October 25, 2012
Fundamentals of Macroeconomics
What is economics? Economics is the study of what people do to coordinate their want and desires through production, distribution, and consumption of goods and services (Colander, 2010). To understand economics, one has to understand the basic fundamentals of economics. Economics is based on two groups’ macroeconomics and microeconomics. So what is macroeconomics? Macroeconomics is the decision-making of an economy as entire picture. In this paper I will cover the fundamentals of macroeconomics, so there is a better understanding of how economics evolves in our everyday lives. Some of the fundamentals of macroeconomics that I will cover will include Gross Domestic Product (GDP), Real GDP, Nominal GDP, Unemployment rate, Inflation rate, and Interest rate (Colander, 2010). The first subject that will be cover in macroeconomics is Gross Domestic Product (GDP). Gross Domestic Product (GDP) is the standard living of a country through its goods and services. These goods and services are produced by any given country in any given time. These goods and services are sometimes the primary source of economic stability of any given country. Real GDP is the market prices primarily on a specific year. An example would be gas prices the year of 2000. Yet we want to know how much quantities of goods and services have been purchased in 2011. One will calculate how much gas was bought in 2011 by multiplying the base year of 2000 prices. Nominal GDP is basically the ups and downs of the market value in prices from its goods and services throughout the year. One example would be gas prices in the State of California. Gas prices in the California at the beginning of 2012 were $3.63. As of October 15, 2012 gas prices have gone up a dollar to $4.62 just for regular gas (California Energy Commission, 2012). Unemployment rate is the statistic of the number of people...