Fundamentals of Macroeconomics

Fundamentals of Macroeconomics

Juan L. Mendez

ECO/372

November 19, 2013

Fundamentals of Macroeconomics

This paper will present information on Macroeconomics, as it relates to gross domestic product, (GDP). Also defined in this paper are real gross domestic product, nominal gross domestic product, unemployment rate, inflation rate, and interest rate. How each of these economic activities affect the government, households, and businesses will be analyzed from the flow of resources from one entity to another.

Macroeconomics is the study of the general phases and mechanisms of a national economy, such as wages, output, and the correlation among each economic sector. Gross domestic products (GDP), real GDP, nominal GDP, are terms used to describe the output of a national economy. The unemployment, inflation, and interest rate are used in correlating the effects of increases and decreases in economic growth on the overall economy.

Gross domestic product (GDP) is the overall market worth on final products and services produced in an economy within a specific period. Real gross domestic product(GDP) is the cost of economic productivity or GDP that is adjusted for price variations such as inflation or deflation. Nominal gross domestic product (GDP)is the determination of actual gross domestic product, without taking into consideration other dynamics, such as inflation.

The Unemployment rate is the result of those individuals in the labor force that are available for work and are actively looking for employment. The labor force is determined by taking the number of individuals, above the age of 16, who are employed and those unemployed individuals that are actively looking for work and adding them together. Actively looking within the labor force means that the individual has been available and looking within the past four weeks. The labor force does not include those individuals who have been looking for over four weeks, individuals that have stopped...