Fundamental of Macroeconomics Paper

812 WordsFeb 4, 20144 Pages
Fundamental of Macroeconomics Paper Sandra Torrey ECO/372 January 19, 2014 Joe Timmerman Fundamental of Macroeconomics Paper There are certain terms that are seen frequently in macroeconomics and there is a cycle among certain sectors of our country that affect each other in a continuous cycle. To understand the cycle the words need to be understood also. Definitions Gross domestic product (GDP) real GDP, nominal GDP, unemployment rate, inflation rate and interest rates are some of the terms that will frequently be seen in economics. Gross domestic product is the cost when something is sold during a certain time period within a country’s borders. This includes finished goods and services. The real GDP is the market value for all finished goods and services that are produced and sold within our country’s border. This GDP is adjusted for inflation so that the final figures show a more accurate picture. If the real GDP did not get adjusted then the values in our market would look a lot higher than what they really are and this adjustment helps the country see what our actual productivity really is. The nominal GDP is the gross domestic product figures that have not been adjusted for an inflation increase or decrease. The nominal GDP is also known as current dollar GDP. The unemployment rate is the percentage of people in the country that are not employed but are actively seeking and are willing to work. The inflation rate is the rate at which the cost of products, goods and services go up. As the inflation rate goes up the spending goes down because the amount of the dollar does not buy as much so the public tends to spend less. The interest rate is the rate at which lenders charge for borrowing money. Lenders also give you a certain interest rate percentage for having money in the bank. This interest rate helps to increase your money depending on

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