Fundamentals of Macroeconomics

Fundamentals of Macroeconomics

Paula Nichols

ECO/372

April 28, 2014

Kathleen Byrne

Fundamentals of Macroeconomics

Part One

Gross Domestic Product (GDP) - total budgetary value of goods and services that a country produces a definitive period of time, however, it is only figured once a year. It constitutes all private and public utilization, government disbursement, exports, and investments except imports within a designated area or region. GDP reports are announced at 8:30 am Eastern Standard Time (EST) on the last day of each quarter and displays the quarter prior.

Real GDP- This is a calibrated measure (inflation) that reflects the rate of all products and services produced during a given year.

Nominal GDP- Nominal GDP means that there have been no adjustments made in price levels or inflation.

Unemployment Rate- is the portion of the entire labor force that is unemployed, but actively seeking work.

Inflation Rate- the rate at which the approximate level of prices for goods and services rise, therefore, reducing purchasing power.

Interest Rates- the amount charged by lenders (i.e., banks or mortgage companies) to borrow for an asset use, which is indicated as a portion of the principle.

Part Two

The purchase of groceries-

Grocery purchases affect every household and is a top concern that cannot and will not be ignored. Grocery purchasing will affect the government, because depending on the condition of the economy determines how much a family would be able to pick up from the local grocery store. If there is a sign of inflation the prices could be too high for the average shopper, and the average shopper may cut back on what they would usually spend on groceries. All households are affected by the quantity of staples that are bought, because there has to be plenty for all in the household to eat. The household could possibly need the government’s help in order to purchase food if they are not capable of making ends meet. Businesses...