Fundamentals of Macroeconomics
Fundamentals of Macroeconomics part 1
• Gross Domestic Product (GDP) – Gross domestic product is how economist measures the growth with change in the market value of final goods and services produced in the market.
• Real GDP- how the economy growth is measured by real gross domestic product. Per capital divided by the total population.
• Normal GDP- Normal GDP changes when the supply levels of the product changes which can change the price of an item. Typically figures for GDP do not change like normal GDP.
• Unemployment Rate- The unemployment rate is the rate of people unemployed in a certain area.
• Inflation Rate- is the persistent rate of change in general goods in services in the economy.
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The inflation rate can affect the prices in most all groceries one example can be the cost of living, which is measured by real GDP. Groceries changes with many factors with one being the normal GDP when the supply level of the good changes it can drive up the price or when there is an over supply of a good it can be less expensive. Another factor that plays a part in the price of the goods is the transportation cost. The transpiration cost can also play into the GDP. All of these factors play into the weekly, monthly, and yearly cash flow of the common household.
The unemployment rate is the rate at any given moment of unemployed people. Massive lay of employees can contribute to the unemployment rising. The corporation can do this to save money by possible outsource work or hiring someone at a cheaper rate. This can play into the GDP majorly by potentially lowering the price of a good produced for the common household. The government is also affected by the unemployment rate as well. The government can be out money for paying unemployment if the individual qualifies.
Decrease of taxes would give the common house hold extra cash flow which in hand give extra money to spend changing the inflation rate. If the household has extra money to spend the supply of things would lower causing a higher demand changing the normal GDP. Which in my opinion would even because there would be less taxes coming in initially, but there would be more people purchasing. Government would get less money up front if taxes were lowered, which would also affect the overall GDP. The tax cut would also generate more business for the common business owner.
All in all those are some of the fundamental changes that affect in microeconomics and how they affect government, household, and business. GDP factor into the majority.
Colander, D. C. (2010). Macroeconomics (8th ed.). Boston, MA: McGraw-Hill/Irwin.