Fundamentals of Macroeconomics

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Fundamentals of Macroeconomics Paper


Fundamentals of Macroeconomics Paper
Part 1
* Gross Domestic Product (GDP)- is the market value of all goods and services within a country in a period of time (Hindsight). * Real GDP- account for changes in the price level, an adjusted measure compared to Nominal GDP. * Nominal GDP- When a GDP figures that has not been adjusted for inflation. * Unemployment Rate- The rate is measure of unemployment citizens by dividing the number of unemployed by all currently employed. * Inflation Rate- Prices of items and services is rising, while purchasing power is in decline. * Interest Rate- The interest is paid by borrowers for the use of money they borrow from a loan lender. Part 2

An example would be food stamps sales and the groceries affects. A household family relies on the food stamps received from the American government, therefore used at the local Piggly Wiggly when buying the food. For someone who works for local government a massive layoff of employees is less likely. However, as an employed worker you are working harder for less money. A impact on retirement savings such as government cashing out citizens 401k’s. The government giving less money for grants for school or improvements on roadways, and fewer services provided to the citizens. A tax decrease will increase disposable income in a household. Disposable income is the main factor driving consumer demands. As a business, it encourages risk taking, hiring more employees, and even entrepreneurship. Government could have the opposite effect. Lowering taxes could mean cuts in department and services provided to the public.

Hindsight. (n.d.). Retrieved from
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