Fundamentals of Macroeconomics: Understanding GDP
June 18, 2012
Mr. Daniel Puente
Understanding Gross Domestic Product
Economists and world political leaders utilize a method of keeping track of their final goods, products and services done within a year called the Gross Domestic Product. It also defines the economic heartbeat of a country by the ebb and flow of how the country as a whole is producing goods products and services including imports and exports. The Real and Nominal Gross Domestic product values are the a more inflated and direct answer for knowing approximately what the value of the countries dollar value are based upon from a period of time and values without inflation being accounted for. The Unemployment rate is the amount of individuals to a country who are currently unemployed or without work who are engaged in searching for employment or values of work. The Definition of Inflation is the rate at which the general level of the prices for goods and services rising, and, subsequently, buying power is drops. This is seen most commonly with examples of buying a loaf of bread 10 years ago versus the present value for a loaf of bread. Interest rates are a value of an item in a percentage where principal is loaned from a lender to a borrower for the use of an asset usually measured in an annual percentage rate (APR) For an example, an individual borrows $100 Dollars from a financial institution at a rate of 10% APR, for every year borrowed $10 dollars would be added to the amount owed back.
In Business transactions around the world, these items listed above are daily interactions With financial institutions and business. For example, an individual who is currently unemployed who shops at a grocery store purchase items on a credit card show for a great deal in all of these listed above. The Individual walks into said grocery store and purchases a high commodity such as rice or corn or even pork are items...
References: United States Department of Labor Statistics (2012). Taken from Department of Labor statistics
Gross Domestic product overview (2012). Taken from investopedia website:
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