Jasmine Smith

Professor Denelane

Principles of Economics

Due: December 6 th 2016

Extra credit Economy assignment

In this economy it can be rather confusing determining what is favorable and what signifies as harmful for a consumer budget in addition to the general economy. There are various aspects that can affect how wealth, goods and services are observed, alloted and valued. Macroeconomics dives into the broader forms of what affects the economy in a positive and adverse manner. While Microeconomics studies one distinctive type of economic view and it affects. Some of the bigger concepts analyzed in great detail in Macroeconomics are; unemployment, GDP and inflation. They act as some of the factors that serve as a foundation for the economy.
Inflation is a sustained increase in the general level of prices over a period of time. Inflation doesn't always strike equally though. For instance, there can be inflation in gas prices and deflation in home prices like in the financial crisis of 2008. Oil prices rose to an all time high of 148 a barrel, which then had a snowball affect as it expanded job prices in a time where many people were unemployed. As of October of 2016 however the inflation rate has been at .12%-1.6 %, which is an outstanding difference from 2008's inflation rate of 4.3%. Inflation enforces the biggest hindrance on those who have hold bonds or treasury notes because the profit of that money decreases causing people to rush to sell them, which also decreases their value. The government must interfere by offering higher treasury yields, which generally increases the cost of mortgages. Inflation affects everyone seperately but as a common rule the outcome is negative. Fortunately, it has been dwindling or staying stagnant since 2008Unemployment is also one of the destructive sides of the economy that is a slippery slope into an excess of other financial issues for the greater economy. There are 3 different types of unemployment: cyclical, frictional and structural. Cyclical unemployment happens because of the ups and downs of the economy overtime. Frictional unemployment occurs because of the job market revenue. That is essentially the time it takes to get a new job after graduating from a college or trade school in addition to the time it takes for people in the labor force to give up their jobs as they retire. The final is structural which is when advanced technologies replace humans in the job market or the experience as a worker becomes obsolete to the company at hand. All of these combined are the various types of unemployment. Since Obama came into term in 2008 there has been a drop in unemployed Americans by 614,000 people which is very substantial but there are still a multiple people unemployed right now than there were before the recession in 2008. It is vital to remember that unemployment only involves people who are in the labor force. The labor force is only compiled of people who are actively seeking employment and are above 16. It does not include people who do not actively seek a job. They are unemployed by choice rather it be a stay at home parent or college students who are not considered a part of the labor force even though a good amount of college students work in college. This is due to inflation rising and university tuition overall increasing dramatically.

The gross domestic product or GDP is one way a country can analyze the size of its economy. It is how much the country produces in one year. This includes all final goods and services produced as well as the intermediate goods that are produced during the progressive stages of production. To measure if ones economy is healthy or not there are a few general staples. One of them is that net exports should be greater than net imports. In addition the unemployment rate should remain low and inflation should stay low. As of right now its at 4.9% which is a big decrease from 2008's 7.3% unemployment rate. This can be attributed to numerous factors but the increase in jobs in the market from multiple start up companies helps a lot. From sidecar to uber and lyft and