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Fundamentals Of Macroeconomics Essay

797 words - 4 pages

Fundamentals of Macroeconomics
ECO/372 Principles of Macroeconomics


Fundamentals of Macroeconomics
Macroeconomics is a type of economics focused on performance and structure of the economy as opposed to individual markets. That focus macroeconomics includes evaluating growth. Clear understanding of macroeconomics starts with the interpretation of basic concepts and definitions. Definitions such as gross domestic product (GDP), differentiation between nominal and real GDP as well as rates of inflation, interest, and unemployment are key terms to become familiar with.
Macroeconomic Terms
Gross domestic product or GDP is the total market value of recognized products, goods, and ...view middle of the document...

The interest rate is the rate at which the fee is paid by the borrower. Interest rates are expressed as a percentage.
Economic Activities
Households, businesses, and government make up the three sectors of the U.S. economy. The sectors intersect and connect the U.S. economy to the rest of the world. That connection allows goods and services to flow between countries and businesses. Households are the most powerful sector and ultimately have control over the other two sectors (Colander, 2010). The Government plays the role of referee and actor. In some instances the government sets rules and in other instances the government collects and spends money on projects. Finally the businesses are otherwise known as the private producing units in society (Colander, 2010). Business is responsible for over 85% of U.S. production while the government is responsible for the other 15% (Colander, 2010). Different activities impact the economy in a number of ways. If the purchase of groceries slows down and people stop spending their money on purchase the economy growth will slow down. Purchasing groceries is a task completed by households. The groceries are an output of business but regulated and taxed by government. For example, government determines what level of taxation is appropriate as well as what goods can be sold and what time they are sold. The ability for government to tax allows them to control their revenue. A different impact could be a large layoff of employees. Households supply...

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