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Fundamentals Of Macroeconomics Essay

934 words - 4 pages

Fundamentals of Macroeconomics

ECO-372 Principles of Macroeconomics
University of Phoenix
Feb 6, 2015

Fundamentals of Macroeconomics
Macroeconomics is the study of the economy as whole rather than individual markets. Macroeconomics further explores issues and considers problems such as inflation, unemployment, business cycles, and economic growth. “Macroeconomics focuses on aggregate relationships such as how household consumption is related to income and how government policies can affect growth” (Colander, 2013). Individuals purchasing groceries, large corporation layoffs and ...view middle of the document...

A simple cake mix produced somewhere in the Midwest in a factory that may employ a few hundred people also has a hand in economic growth. The boxes the cake mix is delivered in are produced in another plant possibly in Mexico and shipped to the Midwest via truck, train or even by air. At each of these points, taxes are levied, and incomes are produced that can be put back into the economy. Production and movement of goods is a continuous process, and the groceries bought every day are only the tip of the iceberg. Everything produced locally or imported and sold in the United States helps stimulating the economy.
Unemployment
The economy and Unemployment are intertwined, if people are not making money, spending is reduced. According to Stephen Simpson a Chartered Financial Analyst, over 70% of what the U.S. economy produces goes to personal consumption and unemployed workers cannot spend at prior levels (Simpson, S. 2011).
What is being called the great recession of 2007 - 2009 by many demonstrates just how the economy affects employment. As the money became scarce so did the job market, employers cut back, and millions became unemployed. As of December of 2014 the United States unemployment rate sat at 5.6% (Taborda, J. 2015). To the average American, these figures may not sound that bad but what this number translates to as far as the labor force is 8,688,000 unemployed. Unemployment leads to higher payments from state and federal government agencies for unemployment benefits, food assistance, and Medicaid (Simpson, S. 2011). At the same time these agencies are not collecting the same needed amount of taxes as before; this creates a vacuum of money going out and nothing in return. Some of the worst effects of unemployment are consumer and business confidence, business to begin to hire and consumers to spend both of these are essential to economic recoveries (Simpson,...

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