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July 10 2012

eco372

Eco 372

Eco372 - A group of Keynesian economists set out to develop a terminology and to measure the concepts they defined so that people would have concrete terms to use when talking about macroeconomic problems (Colander, 2008, p. 532). The terms to be defined are Gross Domestic Product (GDP), Real GDP, Unemployment rate, inflation rate, and interest rate. The discussion will continue with an example of the circular flow diagram showing the interaction between households, governments, and businesses. Last, a current economic condition effecting one’s current organization and the most important economic indicator effecting the organization will be identified.
      GDP
Eco 372 - Gross Domestic Product (GDP) is a measure of aggregated levels of economic activity such as fiscal and monetary policies. GDP is best defined as value-added of the goods and services produced within a given time within a country (Darity, 2008). Colander describes GDP as the total market value of all the final goods and services produced in an economy in one-year period (p.533). The four expenditures that describe GDP are consumption, investment, government spending and net exports
The Components of GDP
Ntc362 - Consumption: is what households spend on goods such as food, shampoo, furniture, and clothing, while services include doctors, lawyers, taxes and so on.
Investment: is not when individuals buy stock, but rather companies borrowing to buy equipment, factories or other goods to increase profits.
Ntc 362 - Government Spending: Only expenses that require production by individuals are considered as goods and services the government buys. For example buying equipment for the space program is considered a government expense. What is not included in the GDP but is an important expenditure in government is social security, and unemployment insurance.

Eco 372
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