Federal Reserve

Understanding economics can be a rather frustrating process. There are many new terms that one must learn. Once people understand the terms that are related to ethics they must also understand how each of those terms effects the economy and how economists use the information to really see what is happening to the economy.

Gross domestic product (GDP) is the total market value of all final goods and services produced in an economy in a one-year period (Colander, 2010 p. 183). Economists use real GDP to measure growth in an economy. Real GDP is the market value of final goods and services produced in an economy, stated in the prices of a given year (Colander, 2010 p. 155). Nominal GDP on the other hand is the GDP without adjustments for inflation. The unemployment rate for a country calculates the percentage of people in the work force who do not have jobs but are looking for paid jobs (BusinessDictonary.com, nd). The inflation rate is a calculation of how prices will change either on a monthly or a yearly basis. Finally interest rate is how much a person is charged to use borrowed money (WordNet Search -3.1, nd).

Everything that we do, from buying groceries to buying a car, from hiring employees to firing or laying off employees, and from increases and decreases, affects the GDP. When the economy first started to have a downward effect, HealthFocus International conducted surveys to see how the economy effected grocery shopping. The survey was given to 1,000 shoppers. The shoppers that were chosen to participate in the survey were the primary shoppers of the household. The survey was given in October and April 2009. The survey, in April, found that 35% of the shoppers were affected by the economy by having less income in the house and that reduction changed the way they shopped for groceries. The survey that was conducted in October's survey found that three-fourths of the people who took the survey in April were even more concerned about the cost of groceries at that time. The government is affected by the amount of taxes they get from the grocery store when customers buy the groceries. If customers are not going to the store as often or are not making as big of purchases, then the government is not getting their taxes. Businesses are affected by the amount of people who shop. When the economy is low and there are less customers, businesses have to fire employees and don't make as much money. When the economy is better, businesses get more money and are able to hire more employees.

When there is a massive layoff of employees not only is the business that had to lay the employees off affected, but the government, households, and communities are affected. Households are affected by massive layoffs because there is not as much income coming into the house. Those people that did not find themselves unemployed are affected because they have to worry more about keeping their job because more