Fundamentals of Macroeconomics
As we start to learn a new subject in school or in the work place we must usually start by learning the fundamentals of that subject because they will be the building blocks from which we will layer on other advanced tools or techniques from. These fundamentals will allow us to become proficient in the subject. When we look at Macroeconomics we are looking at the economy as a whole and how every part of it affects the other. The first fundamental we hear a lot about is GDP or the Gross Domestic Product. This is final output that we helped produced in a given year from goods or services. We are either trending up or down but it is the measuring stick that most economist tend to talk about when referring to the economy. This is because it is an indicator of how the Economy is doing as a whole and people can talk about a whole better than they can speak about a million sub parts to the economy. Also we have the Real GDP or Real Gross Domestic Product. This is the same as GDP as we discussed earlier except with real GDP it takes into account is changes in prices or inflation to come to a final result. Prices are consistently changing and the Real GDP looks at this to determine the finals years GDP. Along the same lines as Real GDP we have Nominal GDP. This similar to Real GDP where it takes into account other factors besides just goods and services produced for the given year. Nominal GDP is the total amount of the goods and services that we have helped produced at the current prices they are at so they don’t take into account price change levels only price at the current state. When it comes to speaking about the economy economist speak about the GDP and its different types to explain our current situations but also they talk about unemployment rates as well because if people are working then they are not contributing to the GDP. The unemployment rate is the number of able bodied workers who want to work but who are not currently...
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