University of Phoenix
Fundamentals of Macroeconomics
The economic status of the United States is based on numerous factors. Gross domestic products (GDP), interest rates, and inflation rates are the factors that help sustain or damage the economy. The gross domestic product represents the overall value of goods over a specified amount of time, which is usually quarterly or yearly. There is also Real GDP, which is the same as GDP but, it shows the inflation value for the overall time span of the goods. Nominal GDP represents the cost of a good before adjusted inflation in the market value. This can sometimes make the overall value appear higher. Inflation in the market causes the price of goods to rise from year to year. Inflation is linked directly with the cost of living. As the cost of living rises, so does inflation. An interest rate is set and charged off of a percentage of the principal balance by a lender. This is done to cover any inflation costs to the lender over the term of the balance earning the interest. Normal everyday factors and activities affect the economy’s growth. Industry, living costs, and taxes all impact the health of the economy. Normal costs of living have a great effect on a typical family’s budget and on the economy as a whole. When times are tough families must decide which areas of their budget are necessities and wants. The necessities take precedent and many of the luxuries get taken out. This means only the bare necessities are purchased at the market. Less of the name brand items get put in the basket, thus impacting those companies. Over the past few years Americans have watched as prices goods steadily raise in their grocery stores. A great example of an item that has increased greatly is meat. Meat prices have more than doubled over the last year because of the steady decline in corn production. Due to the use of alternate fuel source production corn is being taken...