Fundamentals of Macroeconomics
In order to accurately understand countries true economic outlook a person must consider many values. There is not just one value, although some may be better indicators than others. From purchasing of groceries, massive layoff of employees, to a decrease in taxes, each affects not only governments and businesses, but the general household as well. It is important for everyone to have a general understanding of how money flows within his or her economy from one entity to another. Gross Domestic Product
GDP, or Gross Domestic Product is the total monetary value of all finished goods and services produced in a country calculated on an annual basis. It includes total consumer, investment, and government consumption, the value of exports minus the value of a countries imports, investments and government outlays. GDP is used to measure a countries economic health as well as gauge the countries standard of living. Critics of using GDP say that it does not take into account all transactions within a country and may not give a true picture of material well being within a specific country. Real GDP
Real Gross Domestic Product gives an inflation-adjusted measure that represents the value of all goods and services produced within a given year and is expressed in base-year prices. Real GDP is also referred to as constant dollar GDP and inflation-corrected GDP. Unlike GDP, real GDP accounts for changes in price level and can provide a more accurate picture of a contries economic strength. Nominal GDP
Nominal GDP is opposite of real GDP in that it has not been adjusted for inflation and can mis lead the observer into thinking the GDP is higher than it actually is. Nominal GDP is also known as current dollar GDP and chained dollar GDP Unemployment Rate
The unemployment rate itself is defined as the percentage of total labor force not curently employed, but also includes individuals who are actively seeking...
Please join StudyMode to read the full document