Fundamentals of Macroeconomics

Fundamentals of Macroeconomics Paper

Fundamentals of Macroeconomics Paper

According to Colander, (2010). "Macroeconomics is the study of the economy as a whole. It considers the problems of inflation, unemployment, business cycles, and growth". This paper will recognize the key factors (GDPs & Rates) that make and impact the United States economy. It will also provide examples of economic activities such as purchasing groceries, massive layoff of employees, and the decrease in taxes. It will identify how each of the activities affects the government, households, and businesses. It will finally describe the flow of resources from one entity to another for each activity being listed.

Gross Domestic Product

The gross domestic product is used to measure the economic market of all goods and services that are produced in a year's time. Colander, (2010). The GDP aids in analyzing the condition of the economy and it assists in deciding the average standard of living in the U.S. The following factors also influence the United States economy, the real GDP, nominal GDP, unemployment rate, inflation rate, and interest rate. The gross domestic product is the market value of all officially recognized final goods and services produced within a country in a given period of time. The real GDP is an example of the distinction between real and nominal values in economics. Nominal GDP is GDP evaluated at current market prices. Unemployment rate is the percentage of the work force that is unemployed at any given date. The inflation rate is the rate of change of prices as indicated by a price index, calculated on a monthly or annual basis. The interest rate is the percentage of a sum of money charged for its use. Colander, (2010). Purchasing of Groceries

Purchasing of groceries, massive layoff of employees, and the decrease in taxes are activities that affect businesses, households, & government. Buying groceries is something that people do everyday but there is so much competition between the brands. Most of the groceries have the same ingredients in them but they are mostly listed at different prices. Most companies market against each other to gain business and they are always competing in price. This is a good thing for shoppers and consumers. But when the businesses raise their prices on goods and services, the employees actually get fewer chances of financial opportunities. This affects the company by employees leaving, which in return it increases the unemployment rate. When businesses increase their interest rates and costs, the shoppers buy fewer groceries. This also impacts the company's revenues by having less profit. Decrease in Taxes

When the government decreases taxes they are trying