This essay Tayler Adigun has a total of 907 words and 5 pages.
Principles of Economics
Due: December 6 th 2016
Extra credit Economy assignment
In this economy it can be quite puzzling to determine what exactly is beneficial and what classifies as bad for a consumer budget as well as the general economy. There is so many varying factors that can affect how money, goods and services are viewed, distributed and valued and what affect these goods and services have on the economy as a whole. Macroeconomics dives into the broader forms of what affects the economy in a positive and adverse manner. While Microeconomics hones in on one specific type of economic concept and it affects. Some of the bigger ones studied in broad detail in macro economics are ; unemployment, GDP and inflation are some of the factors that serve as building blocks for the economy.
Inflation is when the value of our dollar becomes less valuable and it takes more dollars to purchase the same amount of goods. Inflation doesn't always occur equally though. For example there can be inflation in gas prices and deflation in home prices like in the financial crisis of 2008. Oil prices increased to an all time high of 148 a barrel, which then had a snowball, affect as it increased job prices in a time where many people weren't even working. 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 imposes the biggest barrier on those who have hold bonds or treasury notes because the value of that money decreases and so people rush to sell them, which also decreases their value. The government must accommodate this by offering higher treasury yields, which generally increases the cost of mortgages. Inflation affects everyone differently but as a common rule the outcome is negative. Thankfully it has been declining or staying stagnant since 2008 which was when it reached alarming heights
Unemployment is also one of the negative sides of the economy that is a slippery slope into a plethora 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 turnover. That is essentially the time it takes to get a new job after graduating from a college or trade school as ell as 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 innovative technologies take the place of humans in the job market or your experience as a worker becomes obsolete to the company at hand. All of these combine are the varying 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 significant but there are still way more people unemployed right now than there were before the great recession in 2008. It is important to remember that unemployment only includes people who are in the labor force. The labor force is only compiled of people who are actively seeking employment and are above 16 and does not include people who do not actively seek a job. They are unemployed by choice rather it be parents staying home to take care of children or college students who typically are not considered a part of the labor force even though a good bit of college students have to work in college. This is due to inflation increasing and the cost to attend a university rather it be public or private has increased dramatically.
The gross domestic product or GDP is one way a country can calculate the size of its economy. Its how much the country produces in one calendar year. This includes all final goods and services produced as well as the intermediate goods that are produced during the in between stages of production. To gauge 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