Macroeconomics: Tax and Real Gdp Price Essay

Submitted By daydi
Words: 417
Pages: 2

Macroeconomics
Economic Definitions
The GDP or Gross Domestic Product is a one year total for the market value of all final goods and services produced in an economy(Colander,2010). The The GDP affects the economy by giving the information on what prices are supposed to be during that year. It includes public and private consumption, government outlays, exports, imports. GDP gauges a countries standard of living. The Real GDP is the real gross domestic product that measures the market value for a year of all final goods and services produced in an economy stated in the prices of a given year (Colander,2010). The Real GDP price that is measured is the base or constant price it gives the actual price because it compensates for inflation. Nominal GDP is GDP calculated at existing prices (Colander,2010). Nominal GDP usually shows up higher then it actually is , and is known as current dollar GDP. “Unemployment rate is the percentage of the work force that is unemployed at any given time” (Wordnetweb.princeston.edu, 2013). “Inflation rate of change of prices (as indicated by a price index) calculated on a monthly or annual basis (Wordnetweb.princeston.edu, 2013)”. “Interest rate is the percentage of a sum of money charged for its use (Wordnetweb.princeston.edu, 2013).”
Impact
Decrease in Taxes
A tax cut in some cases are a good thing for the economy because it stimulates it, it often inspires spending. Spending boosts the economy, and causes there to be a demand for more goods and services, this in turn creates the need for more workers. This stimulates one of the two parts of taxes which is the payroll tax. The payroll is the one…