Fundamentals of Macroeconomics: Understanding GDP Ryan Clement June 18, 2012 ECO/372 Mr. Daniel Puente Understanding Gross Domestic Product Economists and world political leaders utilize a method of keeping track of their final goods, products and services done within a year called the Gross Domestic Product. It also defines the economic heartbeat of a country by the ebb and flow of how the country as a whole is producing goods products and services including imports and exports.
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The Real and Nominal Gross Domestic product values are the a more inflated and direct answer for knowing approximately what the value of the countries dollar value are based upon from a period of time and values without inflation being accounted for. The Unemployment rate is the amount of individuals to a country who are currently unemployed or without work who are engaged in searching for employment or values of work. The Definition of Inflation is the rate at which the general level of the prices for goods and services rising, and, subsequently, buying power is drops.
This is seen most commonly with examples of buying a loaf of bread 10 years ago versus the present value for a loaf of bread. Interest rates are a value of an item in a percentage where principal is loaned from a lender to a borrower for the use of an asset usually measured in an annual percentage rate (APR) For an example, an individual borrows $100 Dollars from a financial institution at a rate of 10% APR, for every year borrowed $10 dollars would be added to the amount owed back. In Business transactions around the world, these items listed above are daily interactions With financial institutions and business.
For example, an individual who is currently unemployed who shops at a grocery store purchase items on a credit card show for a great deal in all of these listed above. The Individual walks into said grocery store and purchases a high commodity such as rice or corn or even pork are items that are regularly imported and exported all the while utilizing a credit card which is in essence a loan from a bank given at a APR which can be either fixed or one that fluctuates from one percentage to another, as the economy increases or decreases with the values of the dollar.
As this individual purchases their rice, corn, and pork, the value of the GDP is gained for the nation as a whole by how the item is valued from an import or domestic product and good purchased with the power of that nations dollar value. While this individual is currently unemployed, he or she is joining the ranks of many Americans who currently unemployed with the national standing currently at 8. 1%. (Seasonally adjusted) The United States Department of Labor Bureau of labor statistics currently tracks the nationwide standings in how the Employment rates ebb and flow.
The monthly and annual changes are tracked and estimated for both internal and global markets. Many individuals who are in the current conundrum of being unemployed are often faced with the dilemma of lesser and lesser jobs available or the value for what lesser employers are paying versus what the individual was paid by previous employers. This change is called inflation. Some companies have met in the economic times substantial hardships and several businesses have outsourced their work to other countries. This major loss for both business and the employee causes drastic changes both at home and globally.
Major changes in employment are detrimental for nations economic figures as fewer products made equal less income per capita. These significant issues are detrimental to how businesses deal with day to day operations locally as well as globally. References United States Department of Labor Statistics (2012)
