Week 2: Macroeconomics
ECO/372 Principles of Macroeconomics
March 21, 2013
Every country has their ways of dealing with their economic status. All countries have to worry about the GDP and inflation, just to name a few aspects of the economy. The economy is what will determine all of the finances that happen within a country. For example, the prices of gas, housing, and even food.
There are six aspects that play a major role in making the economy, they are, gross domestic product (GDP), real GDP, nominal GDP, unemployment rate, inflation rate, and interest rate. Gross domestic product, or GDP, is the value of the services and good that are produced within the country. This does not, however, determine the personal income. When one looks at the real GDP, you are looking at the inflation of the economy, what it is causing, and what is causing the inflation to occur. This is what looks at what makes prices go up and down, on products such as oil, produce, and housing. Then there is nominal GDP, which is does the opposite. It does not look into the inflation that occurs in a country. When looking at a country's GDP, it does reflect on the nation's welfare. The unemployment rate indicates an overall percentage of how many citizens are not employed. Inflation rate indicates the increase and decrease of services and goods over time. Interest rate indicates the percentage of interest that must be paid by a borrower to the lender they borrowed money from.
When making purchases, like groceries, the money being spent goes back into the country's economy. Millions of dollars go into making food products, as well as transporting the goods to stores. When purchasing groceries, the money then makes a full circle and pays the workers who make the goods, transport them, pays for them to be transported, and all the way back to paying taxes. Thus helping the country's economy grow. When people lose their...