October 20, 2014
Fundamentals of Macroeconomics
There are numerous issues that actually affect our economy, such acts as real GDP, nominal GDP, gross domestic product (GDP), inflation rate, unemployment rate, and as well as interest rates. All of these areas actually have massive influences over how we purchase groceries, weather there will be a large amounts of layoffs to employees, and decrease in taxes.
What Gross Domestic is basically the market value of services and goods that are produced in the country at any given time, which this is usually considered an indication of the normal living situation within a country. Real GDP on the other hand is a measure of the value of economic output that adjusts for price changes. Nominal GDP is a gross domestic product figure that has not been adjusted for inflation. The unemployment rates are usually the measure of the frequency of unemployment and is calculated by dividing the number of people that are unemployed by the percentage of individuals that are actually working in the labor field. Inflation rate is the percentage rate of change in price levels over time, usually one year. An interest rate is the rate which interest is paid by a borrower for the use of money that they borrow from a lender. All of these factors are related to our everyday lives and how we manage our money, what we spend our money on, and when we spend our money. Buying groceries appears to be a simple task but when you are on a budget it can become stressful. The cost of groceries affects the government because this is a sufficient way that products are produced and sold within our country; which affects GDP, real GDP, and nominal GDP. This is directly related to consumer spending and in times of a recession consumers pull back on their spending and begin to save more.
When consumers begin to monitor their savings this affects businesses because production is down which could lead to layoffs. Buying groceries affects households because thousands of people struggle to provide for their families and when the cost of goods continue to increase but wages decrease this makes daily living difficult. Massive layoffs affect people's standard of living and that is what the GDP is centered around. Having too many layoffs can have a dramatic effect on the unemployment status which causes the economy to have a higher unemployment rate which causes salaries to decrease. Massive layoffs have a vicious cycle and globally in 2012, 200 million people are without employment and this displays the delay in employment growth. Massive layoffs affect the economy dramatically because it has a huge impact on consumer spending. If no one is buying then production is down and that's how layoffs occur. This affects households, businesses, and the government.
Tax decreases can stimulate economic growth because if people are paying less