Macroeconomics: Understanding Gross Domestic Product

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Part One

There are a lot of things that play a factor in the economy. Here are some terms that play a large role in economics, more specifically macroeconomics:

Gross domestic product (GDP) – This is the actual money value of goods or services that comes from a countries borders. This could include car purchases, grocery spending, or even massages purchased. This is to occur during a specific amount of time. This includes private and government spending, investments, imports, and exports. They calculate all these in on an annual basis.

Real GDP- The real GDP can also be known as the “constant dollar GDP” and/or the “constant-price”. This is where they calculate the original GDP and adjust according to current inflation.

Nominal GDP- A nominal GDP is where the calculations have not been adjusted for inflation. It is also known as “chained dollar GDP” or even the “current dollar GDP”. A gross domestic product (GDP) figure that has not been adjusted for inflation.

Unemployment rate- The unemployment rate is a percentage of people without a job who are actively looking for a job. This does not include stay at home parents or anyone not looking for a job. It has to be someone looking and willing to work.

Inflation rate- This is a rate at which the price for goods and services rise. This in turn makes things more expensive which means demand decreases. Demand decreases because people cannot afford as many luxuries as before.

Interest rate- This is a percentage a lender
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