Macroeconomic Principles

GDP stands out as the sum of consumption spending, investment spending, government spending and imports and exports. Real GDP is aimed at separating the impact of inflation on GDP. True GDP is "the production of products and services valued at constant prices" (Measuring, 2008, p. 3). With inflation taken out with the equation, actual GDP measures the size of economic activity. Inflation, interest, and unemployment rates are also macroeconomic principles used to measure the health of an economy. Inflation measures "at what rate costs in an economy are rising" (Measuring, 2008, p. 4).

The Federal Reserve Bank tries to manage inflation by setting the country's base rate of interest. The interest rate could be the rate of interest charged by banks on loans. After interest rates are low, companies often borrow more cash to improve production or expand capacity. As soon as they're high, corporations often resist borrowing dollars to increase capacity or production. The unemployment rate can be crucial as an indicator of o The circular flow diagram shows the relationship or interaction of households, government, and corporation firms: Measuring a nation's income. (2008). Lewis & Clark College. Retrieved August 14, 2008, from http://www.lclark.edu/~bekar/ Mankiw/ch22/notes.htm Where my company (UPS) is concerned, contemporary economic problems are having a crucial impact on operations. Inflation has recently risen to its highest level simply because 1991, while the rising cost of fuel has made reduced profit margins for shippers in general.

Shipping by freight has turn out to be really costly, as diesel fuel is even much more pricey than normal gas. As such, UPS has been forced to increase its shipping costs so that you can offset shrinking profit margins wrought by increased costs of inputs like fuel, tires, trucks, etc. True GDP is the most crucial economic indicator that impacts UPS, primarily since adjusted for inflation this principle measures the production of products and services valued at constant prices.

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