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Fundamentals Of Macroeconomics Paper

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Fundamentals Of Macroeconomics Paper
Fundamentals of Macroeconomics Paper
Chad Jones
ECO/372 Principles of Macroeconomics
April 23, 2012
Tom Hodgkiss

In the world of economics, understanding many terminologies can enhance one’s ability to be successful with consumers’ patterns of using goods or services and how those factors affect the economy when they are produced, distributed, and consumed.
Gross Domestic Product or GDP is the official measure of goods and services produced in a specified period, within a country. Real GDP measures the value of goods and services expressed in prices of a base year. Nominal GDP measures the value of goods and services expressed in current prices. The unemployment rate is an occurrence of a …show more content…
One question lawmakers debate about often is whether or not the United States should decrease taxes. Although many people believe decreases in taxes provides more spending power to consumers, which leads to growth in the GDP, many others believe a decrease in taxes does not free up money needed to boost the economy. However, when taxes are lower consumer spending power results in more jobs for the workforce, additional profits for businesses, and less unemployment claims filed for government …show more content…
Farmers or food producers develop products consumers need and assess the demand curve, which allows profit margins for the prices consumers must pay. If farmers experience a hardship in crop production or a bad harvest season, the demand curve may change and consumers would pay more for groceries. Japans’ catastrophic event, for example, created a cause and effect situation for many countries that depended on resources from the region. Devastation prevented exporting of resources to their intended destination, which hindered businesses, and caused sales to decrease. A decline in sales resulted in many employee lay offs after businesses could not receive the products needed to induce sales. A decrease in taxes affects households, the government, and businesses differently. For the household a decrease in taxes means more money for families to spend on upkeep and leisure activities. Businesses will gain more capital to invest for creating more jobs by enabling growth. However, the government will lose revenue with a decrease in taxes, which could lead to higher deficits and lower investments by domestic and foreign investors alike (Barro & Redlick,
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