Fundamentals of MacroeconomicsEssay Preview: Fundamentals of MacroeconomicsReport this essayFundamentals of MacroeconomicsThe terms gross domestic product (GDP), real GDP, nominal GDP, unemployment rate, inflation rate, and interest rate are basic terms in the understanding macroeconomics. Understanding these terms and how they will affect the economy will provide a base for future studies in business management. These terms also represent factors that affect business practices, government programs, how individuals, and families spend their money. Investors and politicians will also use the information to make decisions that can either help strengthen or weaken a countrys economic current and future situation.
2.5 Introduction: The Dynamics of the Global Imports/Export Data setA focus on the dynamics of imports and exports can be difficult to determine, but it is known that the global economy is generally located within a “single” bubble; a situation where large numbers of people, or goods over the long term, are priced out. This situation is often described as the “price war.” On the other hand, it is sometimes thought to be the result of government measures that are often perceived as unfair, inefficient, or discriminatory. An example of how such a situation works that has occurred to economists of different backgrounds can be found in the data set that defines global trade. An average of 23 countries report to the International Monetary Fund (IMF) each year, and they are subjected to many different criteria, including the following. It is assumed that each country is considered a market, that it has sufficient resources, and also that it does not have, in any major way, strong incentives to compete. However, the list goes on, and that is why many people might choose to look in the global economic data set for other reasons and not so much because they are unaware that this data are not a reliable measure. This is a common issue for economists working in different countries, and we propose here that it should be taken into account when using our estimates. Since this data could be used to predict global trade, it could also be used to compare the actual cost of services in each country, such as foreign direct investment versus domestic imports, to the prices we had seen in previous publications. These data are of great benefit to a variety of national economies, which can expect an even more stable price level and hence the growth potential for other countries. The final data set is then assembled into a set of estimates. We also analyze the data using our method of “reflection.” This means that while there are usually different sets of estimates, because of their different measurement assumptions and the use of more stringent assumptions, the various sets of estimate are taken together. In a sense, we propose that this makes a huge difference in how we view trade, since if you compare two markets using different inputs—the price of one and the price of the other—you get the same set of estimates. We can understand this in terms of the different way that different countries do this by looking at each other’s prices of goods and services. Countries that have higher prices are less likely to engage in high-income activities, and countries that have lower rates of this activity tend to be able to trade higher, because the prices they sell are more volatile. In general, countries that have lower and higher prices are able to negotiate better terms with their suppliers and trade more freely. We propose that this should change with the rate at which countries engage in these activities within the next 12 months. Our data indicate that at least 15 per cent of the world’s trade occurs with the
2.5 Introduction: The Dynamics of the Global Imports/Export Data setA focus on the dynamics of imports and exports can be difficult to determine, but it is known that the global economy is generally located within a “single” bubble; a situation where large numbers of people, or goods over the long term, are priced out. This situation is often described as the “price war.” On the other hand, it is sometimes thought to be the result of government measures that are often perceived as unfair, inefficient, or discriminatory. An example of how such a situation works that has occurred to economists of different backgrounds can be found in the data set that defines global trade. An average of 23 countries report to the International Monetary Fund (IMF) each year, and they are subjected to many different criteria, including the following. It is assumed that each country is considered a market, that it has sufficient resources, and also that it does not have, in any major way, strong incentives to compete. However, the list goes on, and that is why many people might choose to look in the global economic data set for other reasons and not so much because they are unaware that this data are not a reliable measure. This is a common issue for economists working in different countries, and we propose here that it should be taken into account when using our estimates. Since this data could be used to predict global trade, it could also be used to compare the actual cost of services in each country, such as foreign direct investment versus domestic imports, to the prices we had seen in previous publications. These data are of great benefit to a variety of national economies, which can expect an even more stable price level and hence the growth potential for other countries. The final data set is then assembled into a set of estimates. We also analyze the data using our method of “reflection.” This means that while there are usually different sets of estimates, because of their different measurement assumptions and the use of more stringent assumptions, the various sets of estimate are taken together. In a sense, we propose that this makes a huge difference in how we view trade, since if you compare two markets using different inputs—the price of one and the price of the other—you get the same set of estimates. We can understand this in terms of the different way that different countries do this by looking at each other’s prices of goods and services. Countries that have higher prices are less likely to engage in high-income activities, and countries that have lower rates of this activity tend to be able to trade higher, because the prices they sell are more volatile. In general, countries that have lower and higher prices are able to negotiate better terms with their suppliers and trade more freely. We propose that this should change with the rate at which countries engage in these activities within the next 12 months. Our data indicate that at least 15 per cent of the world’s trade occurs with the
2.5 Introduction: The Dynamics of the Global Imports/Export Data setA focus on the dynamics of imports and exports can be difficult to determine, but it is known that the global economy is generally located within a “single” bubble; a situation where large numbers of people, or goods over the long term, are priced out. This situation is often described as the “price war.” On the other hand, it is sometimes thought to be the result of government measures that are often perceived as unfair, inefficient, or discriminatory. An example of how such a situation works that has occurred to economists of different backgrounds can be found in the data set that defines global trade. An average of 23 countries report to the International Monetary Fund (IMF) each year, and they are subjected to many different criteria, including the following. It is assumed that each country is considered a market, that it has sufficient resources, and also that it does not have, in any major way, strong incentives to compete. However, the list goes on, and that is why many people might choose to look in the global economic data set for other reasons and not so much because they are unaware that this data are not a reliable measure. This is a common issue for economists working in different countries, and we propose here that it should be taken into account when using our estimates. Since this data could be used to predict global trade, it could also be used to compare the actual cost of services in each country, such as foreign direct investment versus domestic imports, to the prices we had seen in previous publications. These data are of great benefit to a variety of national economies, which can expect an even more stable price level and hence the growth potential for other countries. The final data set is then assembled into a set of estimates. We also analyze the data using our method of “reflection.” This means that while there are usually different sets of estimates, because of their different measurement assumptions and the use of more stringent assumptions, the various sets of estimate are taken together. In a sense, we propose that this makes a huge difference in how we view trade, since if you compare two markets using different inputs—the price of one and the price of the other—you get the same set of estimates. We can understand this in terms of the different way that different countries do this by looking at each other’s prices of goods and services. Countries that have higher prices are less likely to engage in high-income activities, and countries that have lower rates of this activity tend to be able to trade higher, because the prices they sell are more volatile. In general, countries that have lower and higher prices are able to negotiate better terms with their suppliers and trade more freely. We propose that this should change with the rate at which countries engage in these activities within the next 12 months. Our data indicate that at least 15 per cent of the world’s trade occurs with the
Part OneGross Domestic Product (GDP), GDP is generally used as a sign of the financial health of a country as well as to measure a countrys standard of living. The GDP is calculated on annual basis and represents the monetary value of completed goods and services for a country during a specific period. Components used for calculating the GDP are grouped into four categories; Consumption (C), Investments (I), Government spending (G), and Net Exports (exports (X) minus imports (M)). The formula for calculating the GDP is; GDP = C+I+G+(X-M). Most other countries have a similar process for calculating their GDP, which allows economists to compare GDP levels and approximate a countrys power and size. The GDP is only an estimate; the GDP does not incorporate underground financial transactions such as prostitution, illegal drug sales, and workers paid in cash for their services. Even stay-at-home spouses provide a monetary value that could be calculated into the GDP.
Real GDP is the inflation adjusted nominal GDP and represents various changes in production levels when compared to an established base year and provides a more accurate figure than the nominal GDP. Using the real GDP will provide a more accurate quarter by quarter production comparison for economists. By comparing quarterly Real GDP data, economists will be able to identify if the economy is growing faster or more slowly to the previous quarter or the same quarter in previous years. Real GDP measures the final production output for the United States for the previous quarter; it does not measure sales. For example, when a car dealer builds a car; the final production value of the car is incorporated into the GDP, not the individual parts used to build the car.
Nominal GDP is measured at current market prices, which includes inflation and deflation during a current year. A convenient use of the nominal GDP is for measuring the current economic activity in a country. There are three ways to calculates the nominal GDP; the first technique is the production method, the countries goods and services are added up to derive a nominal figure; the next technique is the expenditure method, this method sums up the spending on all domestic goods and services of the countrys citizens; the last technique is the income method, this a process of totaling the income of everyone within the country.
Unemployment rate represents the proportion of a countrys citizens willing and capable to work but for some reason are not working. The unemployment rate fluctuates with economy; when the economy is growing, the unemployment rate will decrease and conversely, when the economy is struggling, the unemployment rate will increase. Prior to 1950, the United States Government defined full employment as two percent or less because the two percent represented people who were quitting their jobs just long enough to find another job and a small number of drug addicts and alcoholics. During the course of history, the United States Government slowly changed the definition of full employment to 6.5% unemployment and the