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Fundamentals Of Macroeconomics Essay

706 words - 3 pages

Fundamentals of Macroeconomics Paper
Laurie Page
ECO/372
November 06, 2013
Beau Whitney

Fundamentals of Macroeconomics Paper

Macroeconomics affects households, the government, and businesses. The gross domestic product (GDP) measures the dollar value of products or a service at any given time period and shows how strong the economy is. The real GDP measures the dollar value as it changes in the market. Nominal GDP measures how strong the dollar value is (because of inflation, figures are sometimes inconsistent). The unemployment rate is measured by how many people are reported out of work in a country at any given time. The inflation rate measures how prices increase and ...view middle of the document...

When a large amount of people file for unemployment benefits the current unemployment rate increases. The unemployment rate is determined by the number of people who are reportedly out of work in a country at any given time.
Inflation is the rise of prices. The inflation rate affects everyone. When inflation goes up prices go up and people cannot always buy the things they are used to buying and may find they need to make choices that benefit them. If inflation is high consumers tend not to purchase as many goods as they normally would. When inflation is low consumers tend to spend more money which in turn helps the economy. If the economy has more money to spend prices will fall and if price levels fall the same amount of money can purchase more goods.
Interest rates are an important factor in the economy. If interest rates are high people are less apt to borrow money for large purchases. If interest rates are low people will borrow more money to purchase larger items. If people are borrowing and spending this...

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