We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

Fundamental of Macroeconomics Paper Essay Sample

  • Pages: 3
  • Word count: 727
  • Rewriting Possibility: 99% (excellent)
  • Category: inflation

Get Full Essay

Get access to this section to get all help you need with your essay and educational issues.

Get Access

Introduction of TOPIC

GDP is the value of goods and services which is released quarterly by the Federal Reserve. This includes the goods and services manufactured by that country that calculates the state of a country’s economy. This is the main indicator used to calculate the state of a country’s economy. The GDP is the total market value of all products and services produced in an economy within the time period of one year (Colander, 2010). The GDP is categorized into four expenditure categories: consumption, investment, government spending and net exports. A factor to keep in mind is that when the GDP is calculated it does not include intermediate goods (Colander, 2010). The intermediate goods are eliminated from the GDP either by measuring only the final sale or by measuring only value added (Colander, 2010). Economists believe that measuring the living standards with the GDP is a poor means to measure because it only measures market activities. Nominal GDP

A measurement of the total dollar value over the duration of one year that includes consumer spending, the value amount of inflation for products, and services manufactured in a country. Real GDP

Gross domestic product is the final measurement of goods and services that were produced for one year and were adjusted for price changes. The GDP calculations can determine the actual inflation figures. Unemployment rate

The unemployment rate is calculated by dividing the number of unemployed individuals within a country by the labor force (Colander, 2010). When the economy is in a state of recession, the unemployment rate will increase. These figures will indicate how the countr

y is doing economically. Inflation rate The inflation rate

Sorry, but full essay samples are available only for registered users

Choose a Membership Plan
is determined by the continual increase in the price level of goods and services (Colander, 2012). It is a percentage increase of the price level of goods and services within the economy that affects the value of a nation’s currency. When the inflation rate goes up, the buying power for individuals will decline. Interest rate

When an individual needs a loan, an amount of interest is added to the loan amount that the borrower will have to pay to the lending company for borrowing the money. The lower the interest rates the more people will buy that help the economy expand; however, if interest rates are high, the economy will go into a recession. Purchasing of groceries is a necessity that every household needs to survive. When individuals purchase groceries at stores, this affects the economy. Consumer spending on groceries affects the supply and demand that helps the state of the economy. This is positive and beneficial for businesses because sales taxes are being paid that help the government, farmers and food manufactures are benefiting from the purchase because of the increase in demand keeping them in business. When people purchase groceries it benefits employees, the community, business, and government. During massive layoff of employees causes a negative impact on the economy and affects households, businesses, and the government.

Consumer spending declines because individuals have limited or no income coming into the household. There will be a decrease in demand for goods and services, and if the demand is no longer there the supply or manufacturing will diminish. This causes businesses to cut back on labor. Unemployment claims and rates will increase because there will be more people without jobs, which will cause an increase on interest rates. This affects the government because people will be collecting unemployment creating less monies or resources for the government to use. Decreasing taxes can be beneficial for the individuals and businesses; however, for the government it means less revenues and expenditures; however, this increases the spending power for consumers that helps stimulate the economy. Macroeconomics is a constant cycle and affects the government, households, businesses, and everyone in one way or another. It is a vicious cycle that affects not only one entity, but it affects every entity. For instance, when there is consumer spending it comes around full circle in a positive manner helping every entity and putting more growth into the economy.


Colander, D. C. (2010), Macroeconomics (8th ed.). Boston, MA: McGraw-Hill/Irwin

We can write a custom essay on

Fundamental of Macroeconomics Paper Essay Sample ...
According to Your Specific Requirements.

Order an essay

You May Also Find These Documents Helpful

Definition of Cost-Push Inflation

The text "Economics" (2nd Edition) by Parkin and Bade gives the following explanation for cost-push inflation: "Inflation can result from a decrease in aggregate supply. The two main sources of decrease in aggregate supply are: •An increase in wage rates •An increase in the prices of raw materials These sources of a decrease in aggregate supply operate by increasing costs, and the resulting inflation is called cost-push inflation. Other things remaining the same, the higher the cost of production, the smaller is the amount produced. At a given price level, rising wage rates or rising prices of raw materials such as oil lead firms to decrease the quantity of labor employed and to cut production." (pg. 865) Investopedia explains 'Cost-Push Inflation' Cost-push inflation develops because the higher costs of production decrease aggregate supply (the amount of total production) in the economy. Because there are fewer goods being produced (supply weakens)...

Economic Trends in Brazil

Introduction Brazil’s booming economy has to tame “two wild horses” at the same time. A rising inflation rate coupled with a currency appreciating at a fast rate, is destabilizing the economy. With inflation rising at a rate of 6.3%, soon it will rise above the Central banks maximum target of 6.5%. Alongside, the Real has appreciated to 1.58 reais to a US dollar which is one of the highest rates since the Real has been allowed to float from 1991. The problem is such that the “economic cost of bringing down inflation is too high”, as this will harm the economic growth of Brazil. Hence drastic actions are not seemingly attractive. Using a monetary policy where the central bank is increasing interest rates, is making Brazil attractive to foreign investment. In turn valuing the currency and raising prices of exports in the economy. Among many ideas floating to resolve this...

Inflation, Unemployment, Labor Force Change in the...

The article “Inflation, Unemployment, Labor Force Change in the USA” by Ivan Kitov discusses main driving forces of inflation, unemployment rates in the country and, what is more, important, tries to find relation between inflation and unemployment. The author defines relations between inflation and unemployment as “a lagged linear function with a positive coefficient”. The author provides model for macroeconomic analysis of inflation and suggests that it is necessary to identify driving forces that lead to inflation; to evaluate real GDP per capita and to define personal income distribution. Nevertheless, Kitov doesn’t try to recommend anything specific to monetary economists and central bankers. Actually, he assumes that massive efforts should be taken to precisely measure inflation and unemployment to receive potential outcomes. I think that the article contributes significantly macroeconomic studies as it covers the most painful issues of unemployment and inflation which affect every person in the country. Author’s...

Popular Essays


Emma Taylor


Hi there!
Would you like to get such a paper?
How about getting a customized one?