Fundamentals of Microeconomics Assignment

Fundamentals of Microeconomics Assignment Words: 831

Nominal GAP is also calculated at current price for that month or quarter unlike real GAP. Unemployment Rate: unemployment rate is the the percentage or indicator of the labor force that is without gainful employment during any period of time. Inflation Rate: Inflation rate is the percentage of increase in prices of goods and services over a given period of time. Interest Rate: Interest rate is the rate or ratio at which interest or a fee is paid by borrower for the use of borrowed money. The interest rate is generally a percentage of the principle paid out over a certain amount of time.

Economic activities are the actions or process that helps to gage the economy. Economic activities take into account the growth and reduction of economy and all the aggregate expenditure factors that affect it. The Gross Domestic Product or GAP is an economic indicator used to measure economic activity and can determine how these actions affect government, households and businesses. The following three activities though seemingly random have an impact on GAP and the economy. Purchasing of groceries The purchasing of groceries helps the economy in several ways.

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It helps the overspent with import and export relationship with other countries. Many of the items found in the local grocery stores were imported from different countries. The U. S. A purchases from other countries with the understanding that these other countries will purchase goods from our country, which helps to stimulate the economy. Purchasing groceries also helps households take control of their purchasing power to buy the wants, needs, and necessities of the family. This seemingly simple activity positively affects the economy.

And last but not least purchasing groceries helps the economy by employing dock rockers, cashiers, stock boys, clerks, and other personnel that are essential in making a grocery store operate. Increased revenue in a grocery store means increased business which increases the need for additional personnel to meet the demand of the consumers. If the household does not exercise their purchasing power more food will remain on the shelf which will decrease the need for food to be imported from foreign countries.

The economy will become stagnate because there is no output of funds, and the grocery stores will have to lay off employees or institute a hiring freeze because the revenue goes not meet the expenditures. It is supply and demand at its most basic form. Massive layoff of employees The massive layoff of employees is an economic activity that is detrimental to the economy. For the government it means cut backs on different funded programs because larger portions will be paid Out for unemployment benefits.

These payouts have the capacity to cause a financial crisis for the nation. Massive layoffs will also mean that homeowners can lose their homes and no longer meet their credit obligation which not only affects the households but also the government because it increases the nation’s deficit which is already over a trillion dollars. It only takes one layoff to affect the quality of life in a household. A layoff changes the way a family spends money. Disposable income has been eliminated and providing basic necessities for the family can become struggle.

Foreclosure rates rise, and output of money decreases which is not only hard on a household but a community and the economy. Massive layoffs in one industry can have a domino affect in others. In the town of Roxbury, North Carolina a manufacturing plant closed causing half of the town to be unemployed. Soon after the plant lay-off the daycare and the car dealership closed because they were no longer receiving business from the employees of manufacturing plant. Layoffs do not only change the life of one person, it has a ripple effect.

Decreases in taxes Decrease in taxes can be both beneficial and detrimental to the economy. The decreasing of taxes will have a negative effect on the government because it would mean less revenue coming in. On the other hand a decrease in taxes will have a positive effect on households because it will increase disposable funds and allow more spending opportunities for households and families. Increased funds mean that more goods and service will be purchase which will stimulate the economy and provide much needed economic growth in the U. S.

A decrease in taxes will be beneficial to businesses because the overall cost of their products will be lower. Lower prices give consumers more confidence in their spending power which leads to more purchases, more jobs, and expansion and investment opportunities which improves the economy and the growth of the GAP. Economic activities occur on a daily basis many times without the average citizen’s knowledge. The decisions the overspent make about the U. S. Fiscal actions can cause economic growth or financial disaster to an entire nation.

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Fundamentals of Microeconomics Assignment. (2019, Sep 23). Retrieved September 28, 2022, from