Basic Foundation of Macroeconomics
The Basic Foundation of Macroeconomics
In the study of Macroeconomics, one would learn about the economy in its entirety when looking at what the words “macro” and “economics means. “Macro” as an adjective means “very large in scale, scope, or capability” (dictionary.com) and “economics” means “science that deals with the production, distribution, and consumption of goods and services, or the material welfare of humankind; (plural) financial considerations; economically significant aspects” (dictionary.com). Macroeconomics reflects the issues in regards to inflation, growth, unemployment and business cycles and trends. Macroeconomics analyzes certain aggregate interacts with such things as how some government policies can affect growth and the relationship between aggregate demand and supply. In order for one to study macroeconomics, a person will need to understand the basic foundation and terminologies of the subject. Today, macroeconomics deals with aggregate economic factors, such as the gross domestic product (GDP) of different nations, employment and unemployment, government debt, the balance of trade, economic trends, inflation of entire nations and great economic divisions. Gross domestic product is is the total market value of all final goods and services produced in an economy in a one-year period. GDP is probably the single most-used economic measure.” (Colander, 2010). “Gross domestic product is the total market value of all final goods and services produced in an economy in a one-year period” (Colander, 2010). Every country’s economic development has been and will always be measured by the increase of its economy. When commodity is produced and sold and income is gained; it creates a total output and total income to increase continuously. The real gross domestic product is “The market value of final goods and services produced in an economy,...
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