Part 1

Describe the following terms in your word.

·Gross domestic product (GDP)
·Real GDP
·Nominal GDP
·Unemployment rate
·Inflation rate
·Interest rate

Part 2

Consider the following examples of economic activities:
·Purchasing of groceries
·Massive layoff of employees
·Decrease in taxes

Describe how each of these activities affects government, households, and businesses. Describe the flow of resources from one entity to another for each activity.

Write a 700 to 1500 word paper summarizing the results.

Solution Preview

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• Gross domestic product (GDP)
The Gross domestic product is the total market value of goods and services produced within a domestic region physically during a fixed period of time usually quarterly and yearly. There are three methods to actually measure the GDP: product approach, income approach, and expenditure approach. The most direct way is the product approach, which totals all final products of goods and services from which the cost is subtracted. The expenditure approach works based on the principle that the amount people spend on should reflect the values of the goods and services. The income approach is based on the principle that the incomes of producers must be equal to the value of their product....

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