Unemployment And Inflation Essay

1154 Words 5 Pages
“The Federal Reserve plays a major role in controlling unemployment and inflation. They rely on economists to give them data in order to control these areas. The economists use data to determine if the economy is growing or shrinking in size, the measure of total output calls the real gross domestic product is used. The real gross domestic product (Real GDP) is the market value of all final goods and services produced within a country in a giving period. Every legal goods and services paid for that can be tracked makes up the Real GDP. The market value is the benefits of all final goods and services produced even if the total output falls. If the Real GDP falls significant for a certain period of time the economy would be in a recession. This …show more content…
The labor force is based on the total number of working and unemployed people. The unemployment rate is based on the total number of people not working, looking and available plus the number of people working. An unemployed person not looking is not counted in the unemployment rate. Unemployment has three categories, Frictional Unemployment, Structural Unemployment and Cyclical Unemployment. Due to the time it takes employers and workers to find each other, not enough employees meet the skill requirement or the economy is not working at its natural level of …show more content…
The capability to produce goods and services even if prices fall, the same level of supply and services will be provided. When the Aggregate Supply prices go up, the economy will go up. If it goes down, the economy work force will go down. Aggregate Demand is the total quantity of goods and services demanded from four sources; households (personal consumption), firms (investment), government agencies (government purchases) and foreign markets (net exports) equal the Real GDP.” It slopes downward because of the change in the price level that alter consumption known as the wealth effect, lower interest rates on investment and lower the price on trade increases exports. The aggregate demand curve shifts when the quantity of the real GDP at each price level changes. When the Aggregate Demand prices go down the Real GDP

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