W2 Assignment

Topics: Inflation, Economics, Consumer price index Pages: 3 (737 words) Published: October 16, 2013
Gross domestic product (GDP)
The GDP is the sum of all services and finished products tendered or sold, given that a financial transaction took place. The GDP includes consumption, investment, government spending, and net exports. GDP does not include the cost of raw materials used to produce other goods, and also excludes the value of services provided by house spouses, which Colander (2010) suggests is a way of discrimination towards this segment of the population, traditionally made-up mostly of women. The way the GDP is calculated varies depending on the economist, as well as the country. Real GDP

Real GDP is adjusted for inflation. Using price levels for a basket of products or services, certain conglomerates of economists carry out the collection and analysis of vast amounts of data in order to measure inflation. By knowing the increase in price levels, economists can know the inflation ratio for the given period and subtract it from the Nominal GDP in order to find the inflation-adjusted or deflated GDP Nominal GDP

The nominal GDP is the GDP before adjusting it for inflation. Unemployment rate
The actual unemployment rate is the percentage of people out of the workforce who are willing and able to work, but can’t get a job. The target unemployment rate is the lowest sustainable unemployment rate at the economy’s highest efficient production capacity. Inflation rate

The inflation rate is the percentage rate of increase of the price levels measured. One common index is the Consumer Price Index or CPI, which measures the price levels changes in a variety of products and services including rents. By measuring the changes in price levels, economists can also measure the devaluation of the currency, or its decrease in buying power. Interest rate

The interest rate is the periodic cost of borrowing money or contracting a debt. In most financial scenarios is common to use an annual interest rate. Interest rates vary depending on the industry, but at the...

References: CPI Detailed Reports, Bureau of Labor Statistics (2010)
Retrieved from (www.bls.gov)
Colander, D. C. (2010). Macroeconomics (8th ed.). Boston, MA: McGraw-Hill/Irwin.
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