Fundamentals of Macroeconomics Essay

865 Words 4 Pages
Benson James
ECO 372
Fundamentals of Macroeconomics
08 October 2013

The gross domestic product (GDP) is defined as the market value of all goods in any country at any specific time. The gross domestic product is frequently used to establish a country’s wealth or standard of living. Even though the GDP is supposed to determine a country’s economic health, many nonbelievers think the gross domestic product does not account for the underground economy. An underground economy would consist of transactions that are no reported to the government. The first thing that comes to mind as an example would be restaurant servers. Not all restaurants require servers to claim all of their tips.
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The inflation rate is a way to show the rise in the prices of goods and services over a specific amount of time. The inflations tend to increase when there is an excess of money entering the market. When this happens, the price of goods and services must be raised in order to compensate for the decreased value of money.
An interest rate is a fee usually applied to something because of the use of money. Interest rates are usually in the form of a percentage. Interest rates can be good as well as bad for consumers. When a person takes out a loan, there is usually an interest rate placed on top of a loan. For example, if a person takes out a $2000 loan and is charged 50 dollars per year for the loan, the interest rate would be 2.5%. Another example of interest rates would be the rates that are applied to a savings account. If someone was to put money in a savings account it would accumulate interest over time. Depending on the type of account the interest rates will vary.
Purchasing of groceries is a necessity for every household because people cannot go without the goods for everyday use. When people have a greater amount of money, they will tend to spend more at the grocery stores, which will benefit the government. If the economy is weakening and inflation is on the rise, the government may have to offer assistance to households who cannot afford to purchase their groceries. Businesses want the economy to do well because they want to stay competitive

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