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Individual Week 2

In: Business and Management

Submitted By Noedisellys
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This paper will be divided into two distinct parts the first part will consist of the 6 terms used to describe macroeconomics and second part will provide 3 examples of economic activities. The purpose of part 1 is to define six terms of macroeconomics which include: Gross domestic product, Real GDP, Nominal GDP, Unemployment rate, Inflation rate and Interest rate. Part 2 will discuss how the following economic activities: purchasing of groceries, massive layoff of employees and decrease in taxes affects the government, households and businesses.
Macroeconomic Terms: Gross Domestic Product The Gross domestic product which is referred to as the GDP for short, is best defined as the as the main indicator used to calculate the state of a country’s economy. The GDP is the total market value of all products and services produced in an economy within the time period of one year (Colander, 2010). The GDP is categorized into four expenditure categories: consumption, investment, government spending and net exports. A factor to keep in mind is that when the GDP is calculated it does not include intermediate goods (Colander, 2010). The intermediate goods are eliminated from the GDP either by measuring only the final sale or by measuring only value added (Colander, 2010). Economists express that the GDP may be a poor means to measure and compare the living standards of people among different countries because it specifically measures market activities only.
Real Gross Domestic Product Real GDP is formulated by dividing the Nominal GDP by the GDP inflator and multiplying it by 100. The solution reflects the real GDP to show the actual amount of inflation. It can also be defined as the nation’s final number of goods and services that were outputted for a one year period and were adjusted for price changes. The market value of goods and services will change…...

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