Fundamentals of Macroeconomics

Fundamentals of Macroeconomics Paper

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9 June 2014

ECO/372

Carl Bowan

A government is the system by which a state or community is governed. The government is one part of the equation that makes of macroeconomics. “Macroeconomics is the study of the economy as a whole. It considers the problems of inflation, unemployment, business cycles, and growth. Macroeconomics focuses on aggregate relationships such as how household consumption is related to income and how government policies can affect growth” (Colander, 2013). America produces less of goods but more of services. The country generates high-skilled workers that offer a certain price for their services abroad. Their financial activities may arguably have the greatest effect on our economy because their decisions affect the whole nation. Purchasing of groceries, massive layoff of employees, and decrease in taxes are economic activities that affect government, households, and businesses.

Purchasing of groceries

Gross Domestic Product is an annual calculation of the monetary value of all the nation’s finished services products and finished goods. GDP is commonly to track the economic health of a country, (Colander, 2013). Nominal Gross Domestic Product is the measuring of services and goods that are produced by the nation that are not measured in base year prices, also known as current dollar GDP. It has not been adjusted for inflation. Inflation rate is when the cost of services and goods are increasing and the purchasing decreasing, (Colander, 2013). On the other hand, real gross domestic product is an inflation adjustment that measures of services and goods that are output by the nation that are measured in base year prices. Real GDP can account for changes in the price level, and provide a more accurate figure, yet nominal GDP does not, (Colander, 2013). Households play a vital part of the economic system. Purchasing groceries is an economic activity that affects the government,...