Economics

GDP:
Gross Domestic Products (GDP). GDP is the market value of all final goods and services produced in a country in a given year. GDP consists of four parts. This are• • • • Personal consumption expenditure Gross private domestic investment Government consumption expenditure and gross investment Net exports of goods and services

Increase or decrease in any of this variable affects the overall GDP. If government increases it’s spending than the GDP increases. If private business sector increases its investment expenditures, GDP will increases. A fall in investment would cause a decline in consumption, which would cause a decline in GDP. On the other hand, an increase in investment would cause an additional increase in investment consumption expenditures, which would cause an additional increase in GDP. In Bangladesh GDP growth rate is 5.83 .

GDP = Consumer spending + investment + Govt. spending + (Export-import)

Basically. Economic growth: Economic growth refers to an increase in total spending in the economy. Economic growth can be measured in nominal terms. it is a study of national economies and the determination of national income. Macroeconomics deals with four factors that concern a business: 1. It means that the firm can produce more. Unemployment. provide more profits to owners and employ more workers. GDP and GNP can produce different measures of total output. It shows up as an increase in gross domestic product. 3. all other things being equal Gross National Product (GNP) is often contrasted with Gross Domestic Product (GDP). Interest rates and 4. It is primarily concerned with variables which follow systematic and predictable paths of behavior and can be analyzed independently of the decisions of the many agents who determine their level. . under the assumption that a higher GNP leads to a higher quality of living.GNP: Gross National Product (GNP). 1. While GNP measures the output generated by a country's enterprises .GDP measures the total output produced within a country's borders . minus income of non-residents located in that country. GNP is the total value of all final goods and services produced within a nation in a particular year. For comparing one country's economic growth to another. which are adjusted for inflation. plus income earned by its citizens (including income of those located abroad). GDP or GNP per capita should be used as these take into account population differences between countries. Inflation. Macroeconomics: The field of economics that studies the behavior of the aggregate economy.whether produced by that country's own firms or not. When a country's capital or labor resources are employed outside its borders. which include inflation. Too much growth by a firm can eventually to problems in production and out of costs. or in real terms. Economic growth. GNP measures the value of goods and services that the country's citizens produced regardless of their location.whether physically located domestically or abroad . Economic growth can be a two-edged sword. 2. or when a foreign firm is operating in its territory. GNP is one measure of the economic condition of a country. More specifically.

Second. Inflation: Inflation refers to a general increase in prices or an increase in the prices of most goods and services. if economic growth is interrupted by interest rates. Because prices are increasing rapidly. managers do not know how to react. If interest rates are increased people are not eager to borrow money from bank or financial institution. As a result. So. Third. Interest Rates: Interest is the price paid by individuals or business to borrow money.2. In one view a more rapid rate of money growth plays an active role in inflation and results either from mistaken policies of the Federal Reserve or the Federal Reserve subordinates itself to the fiscal requirements of the federal government and finances budget deficits through money creation. Rate expresses that price as a percentage per taka of funds borrowed. it will cause even more inflation. All of this is affected to economic growth. an astute manager will watch inflation data closely and be prepared to react when necessary to offset inflationary cost increases. otherwise it will stable or increase. rates increase the total price to customer pay that is the credit for product and services. our development will not be possible. If all business raises their prices to offset their own increasing costs. most businesses borrow money to run their daily business. Thus our unemployment problem will not be solved. It is known to all that economy is the back bone of a nation. consumption will be decreased as well as production will be decreased. the control inflation rests with the Federal Reserve and depends upon its willingness to limit the growth in the money supply. Since inflation can affect both sales and costs of doing business. especially if inflation rates are high. As inflation increases. According to this view. 3. Another problem with inflation is the uncertainty it causes. Interest rates affect business in three significant waysFirst. interest is on the expansion of a business. The impact of inflation on business can be severe. The most popular measure of inflation is the consumer price index (CPI). In the same way sell and investment will be lessened. more money is required for consumers to purchase the same amount of goods. .

Unemployment is usually measured by the unemployment rate.Structural Unemployment 3.Cyclical Unemployment Causes The time required to find a job. .Seasonal Unemployment 4. Example: Suppose any firm wants accountant. that’s why he can’t get that job because of his skill which the firm wanted. Forms of unemployment 1. Seasonal nature of jobs. The rate of the number of people classified as unemployment to the total labor forces is called unemployment rate. Insufficient growth of economy. Example: If anyone don't try hard to find work or don’t want to go abroad for work is like frictional unemployment. Structural Unemployment: Standard unemployment refers to people who can’t find job because the skills they pose are not appropriate for this job. Inappropriate skills. but the applicant completed his/her graduation in management. Frictional Unemployment: Frictional unemployment refers to people who are looking for work and will eventually find job if they keep looking.4. it is called unemployment.Frictional Unemployment 2. There are several forms of unemployment and they have some causes. Unemployment: Wanting to work but not having a job.

inflation will be created. Many of this people will have to wait economy to improve before they can find job. Example: In a construction firms. Cyclical Unemployment: Cyclical unemployment refers to people who can’t find job because a decline in economy has caused employers to cut back on hiring. At the same time unemployment will be created. If unemployment rates high than the people who currently holding job will be less likely to take a chance on a new higher paying job for fear that they might also end up unemployed if the new job doesn’t work out. . interest rates increase 10%-20% people will not interest to borrow money from bank and other financial institution. Vis-aVis inflation will be rising. our economic growth and GDP will decrease. Example: When the employees dies-charged for recession is like seasonal unemployment. but when their construction is completed their job is also finished. On the other hand. If interest rate increases. In this situation. Unemployment has an impact on economy. growth and unemployment is called monetary policy. To promote economic growth. If taxes and government spending increases. Monetary Policy: Changing the money supply to change interest rates directly. Suppose.Seasonal Unemployment: Seasonal unemployment refers to people in a situation in where the job is available only at certain seasons of the year. people will not interest to loan. thus influencing inflation. In the other case. interest rates decrease 10%5% people will interest to borrow money from bank and other financial institution. Interest rate is the key point of monetary policy. control inflation and adjust interest rates are the main target of fiscal policy. there they need many employees. Fiscal Policy: Raising or lowering taxes or government spending in order to influence growth unemployment and inflation is called Fiscal Policy. economic growth will be increased and unemployment will be showed. reduce unemployment.

if taxes and government spending are decreased our economic growth and GDP are increased. It falls for at least two quarters.At that point the business cycle enters the next stage. At last we can say that Govt. The Business Cycle: A somewhat regular pattern of ups and downs in aggregate production. It is followed by a period of years during which the GDP rises. The business cycle has four parts. This is usually a short stage. measured by fluctuations in real GDP. needs both monetary and fiscal policy to deal with the ups and downs of the business cycle. which is called the trough. official declares that are cession has occurred. One stage is the recession during which the GDP is falling. Besides inflation will not be raising and unemployment will be created. This period of economic growth is called an expansion. known as the business cycle. Sooner or later growth stops and the GDP enter the fourth stage. . then the govt.

The business cycle peak is usually a very short stage and is followed by a recession that marks the beginning of a new business cycle.called the Peak. .

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