Thursday, July 7, 2016

Macroeconomics

Macroeconomics is the branch of economics that studies how the aggregate economy behaves. It focuses on aggregate expenditure and consumption of a nation or region. The amount saved and spent by all households, the productiveness of the country's labour force, and how actions of the government and central bank stimulate the overall economy.
Common Macroeconomic measurements include GDP (the total amount of goods produced by an economy), Unemployment (the % of people in the economy that are not working) and inflation (the rate at which the prices are increasing).
Macroeconomists develop models to explain the relationship between a variety of factors such as consumption, inflation, savings, investments, international trade and finance, national income and output to the overall economy, and at what magnitude each factor can affect the economic environment as a whole.
They study the aggregated indicators of unemployment rates, GDP and price indices, and then analyse how different sectors of economy relates to one another to understand how the economy functions.
Macroeconomics is important for governments and regulators to determine, the monetary policies and fiscal policies that are needed in order to obtain a stable growth and price stability in an economy.
It is also important for investors to have the ability to examine a country's current and future economic environment, since this will allow them to pinpoint assets and securities that may benefit or be harmed by economic variables.
Macroeconomics focuses on the variables, such as government spending, inflation, employment rates, consumption, all of which can affect the health of various industries, companies and securities.
Hence macroeconomics in its most basic sense, is the branch of economics that deals with the structure, performance, behaviour, and decision making of the whole, or aggregate economy, instead of focusing on individual markets.