What_Is_Gdp

1. Gross Domestic Product (GDP) 2. Real GDP 3. Unemployment rate 4. Inflation rate 5. Interest rate In your paper, explain how the circular flow diagram illustrates the interaction of households, government, and business. Also, describe how current economic conditions are effecting your organization (or an organization with which you are familiar). Identify the most important economic indicator affecting your organization and explain why. Prepare a 700-1,050-word paper in which you define the following terms: What Does Real Gross Domestic Product (GDP) Mean' This inflation-adjusted measure that reflects the value of all goods and services produced in a given year, expressed in base-year prices. Often referred to as "constant-price", "inflation-corrected" GDP or "constant dollar GDP". Investopedia explains Real Gross Domestic Product (GDP) Unlike nominal GDP, real GDP can account for changes in the price level, and provide a more accurate figure. Let's consider an example. Say in 2004, nominal GDP is $200 billion. However, due to an increase in the level of prices from 2000 (the base year) to 2004, real GDP is actually $170 billion. The lower real GDP reflects the price changes while nominal does not. http://www.investopedia.com/terms/r/realgdp.asp What's the difference between nominal and real' [A:]Great question! Generally a real variable, such as the real interest rate, is one where the effects of inflation have been factored in. A nominal variable is one where the effects of inflation have not been accounted for. If inflation is positive, which it generally is, then the real interest rate is lower than the nominal interest rate. If we have deflation and the inflation rate is negative, then the real interest rate will be larger. GDP, or Gross Domestic Product is the value of all the goods and services produced in a country. The Nominal Gross Domestic Product measures the value of all the goods and services produced expressed in current prices. On the other hand, Real Gross Domestic Product measures the value of all the goods and services produced expressed in the prices of some base year. An example: Suppose in the year 2000, the economy of a country produced $100 billion worth of goods and services based on year 2000 prices. Since we're using 2000 as a basis year, the nominal and real GDP are the same. In the year 2001, the economy produced $110B worth of goods and services based on year 2001 prices. Those same goods and services are instead valued at $105B if year 2000 prices are used. Then: "The interest rate is the yearly price charged by a lender to a borrower in order for the borrower to obtain a loan. This is usually expressed as a percentage of the total amount loaned." Interest Rate or Interest Rates' In day to day conversation we tend to hear references to "the interest rate". This is somewhat misleading, as in an economy there are dozens if not hundreds of rates interest between borrowers and lenders. The differences in rates can be due to the duration of the loan or the perceived riskiness of the borrower. To learn more about the different types of interest rates, see What's the Difference Between all the Interest Rates in the Newspaper' Theoretically nominal interest rates could be negative, which would imply that lenders would pay borrowers for the privledge of lending money to them. In practice this is unlikely to happen, but on occasion we do see real interest rates (that is, interest rates adjusted for inflation) go below zero. To learn more, see: What Happens if Interest Rates Go To Zero' In economics, the inflation rate is a measure of inflation, the rate of increase of a price index (for example, a consumer price index).It is the percentage rate of change in price level over time. The rate of decrease in the purchasing power of money is approximately equal. en.wikipedia.org/wiki/Inflation_rate Filed In: 1. Economics Inflation Rate The inflation rate is one of the most important economic forces consistantly weighing on the value of a nation's currency. The following resources contain case studies of historical inflation rate as well as information on the relationship between the inflation rate and consumer prices. Inflation is a rise in consumer prices, increasing the cost of living. Some inflation is caused because a country has printed too much money or experienced tremendous financial disaster, causing its currency to plummet. Other sources of inflation can be higher input or transportation costs such as gas, which makes it more expensive to ship good to the store. When the pressures get too great, retailers often pass these costs on to consumers. inflation rate Hide links within definitionsShow links within definitions Definition The percentage increase in the price of goods and services, usually annually. In economics, the inflation rate is a measure of inflation, the rate of increase of a price index (for example, a consumer price index).It is the percentage rate of change in price level over time. [1] The rate of decrease in the purchasing power of money is approximately equal. It's used to calculate the real interest rate, as well as real increases in wages, and official measurements of this rate act as input variables to COLA adjustments and Inflation derivatives prices. * the percentage of the work force that is unemployed at any given date wordnetweb.princeton.edu/perl/webwn * Unemployment occurs when a person is available to work and seeking work but currently without work. The prevalence of unemployment is usually measured using the unemployment rate, which is defined as the percentage of those in the labor force who are unemployed. ... en.wikipedia.org/wiki/Unemployment_rate * is the number of unemployed as a percentage of the labor force. www.wrksolutions.com/employer/lmi/profiles/definitions.doc represents the number unemployed as a percent of the civilian labor force (see above).Unrelated subfamily is a group of two persons or more who are related to each other by birth, marriage, or adoption, but who are not related to the householder. ... nces.ed.gov/pubs98/yi/y9600d.asp Percentage of employable people actively seeking work, out of the total number of employable people; determined in a monthly survey by the Bureau of Labor Statistics (website: www.bls.gov). An unemployment rate of about 4% - 6% is considered "healthy". Lower rates are seen as inflationary due to the upward pressure on salaries; higher rates threaten a decrease in consumer spending. Unemployment occurs when a person is available and willing to work but currently without work.[1] The prevalence of unemployment is usually measured using the unemployment rate, which is defined as the percentage of those in the labor force who are unemployed. The unemployment rate is also used in economic studies and economic indices such as the United States' Conference Board's Index of Leading Indicators as a measure of the state of macroeconomics. Keynesian economics emphasizes unemployment resulting from insufficient effective demand for goods and services in the economy (cyclical unemployment). Others point to structural problems and inefficiencies inherent in labour markets; structural unemployment involves mismatches between demand and supply of laborers with the necessary skillset, sometimes induced by disruptive technologies or globalisation. Classical or neoclassical economics tends to reject these explanations, and focuses more on rigidities imposed on the labor market from the outside, such as unionization, minimum wage laws, taxes, and other regulations that may discourage the hiring of workers (classical unemployment). Yet others see unemployment as largely due to voluntary choices by the unemployed and the time it takes to find a new job (frictional unemployment). Behavioral economics highlights phenomena such as sticky wages and efficiency wages which may lead to unemployment