Macroeconomic Terms and Concepts
Macroeconomics study’s the overall level of production in the economy. “Economists assess the success of an economy’s overall performance by studying how it could achieve high rates of output and consumption growth” (Macroeconomics, 2008, para. 5). In the following paragraphs, various aspects of macroeconomics will be analyzed. First, the United States (U.S.) functions as a market economy and is affected by fluctuations in production output levels of the gross domestic product (GDP), inflation and interest rates, and issues of unemployment. Second, economic models help explain visual concepts, one in particular is the circular flow diagram that illustrates the interaction of households, businesses, and governments in the U.S. market economy. Third, an analysis of how the Florida Hospital organization has been affected increased unemployment and the current economic conditions of the economy.
Production output levels of the U.S. economic market fluctuates up and down and is referred to as the nominal GDP, which is the total market value of all the final goods and services produced in current year prices. The GDP is the sum of the expenditures made by the four sectors of the economy; consumption by households, investments by the business sector, government spending by the government sector and net exports by the foreign sector. To express the formula with the expenditure approach is as follows.
GDP = Consumption + Investment + Government spending + Net exports, or
GDP = C + I + G + (X – M)
The real GDP is a more accurate measurement of the value of goods and services because it takes into consideration any changes in price levels, such as inflation. Real GDP is defined as the sum of all the current goods and services produced, but measured in base year prices. When measuring how much the price level has changed from one year to the next, a price index is...
References: Colander, D.C. (2008). Economics, 7th ed., Burr Ridge, IL: McGraw-Hill/Irwin
Macroeconomics. (2008). In W. A. Darity, Jr. (Ed.)International Encyclopedia of the Social Sciences, (Vol. 4). (2nd ed., pp. 539-543) Detroit: Macmillan Reference USA Retrieved March 19, 2010, from Gale Virtual Reference Library via Gale: http://go.galegroup.com.ezproxy.apollolibrary.com/ps/start.do?p=GVRL&u=apollo
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