Economics Analysis

Economics Analysis

Basic concepts of macroeconomics

This article makes emphasis on the basic concepts of macro economics. The traditional definition of macroeconomics is the study of economic aggregates. Unlike microeconomics, which deals with the behavior of businesses, consumers, markets, and even sectors, macroeconomics is concerned with the aggregate data, such as the level of production and the price level. Macroeconomics is an independent branch of economics that explores not only the national economy of individual countries, but also the entire global economy (Bender 2002). It considers the economy as a whole across the country as the national economy. The national economy is historically formed within certain territorial limits of the system of social reproduction. The key Concepts of Macroeconomics are Gross Domestic Product (GDP) and gross national product (GNP). They are the main economic activity level meters in the community. The measurement accuracy is crucial, because it ultimately depends on the validity of the theoretical findings. They are very convenient because they allow uniformly measure performance in different areas of business and give them in a summarized form. But at the same time they are uncomfortable, because under the influence of inflation, cost estimates of GDP (GNP) for different periods are incomparable (Brown 2000). This creates a need to distinguish between nominal and real GDP (GNP). Great significance of the measurement is not only the level of GDP (GNP), i.e., its absolute size, but its growth rate, the relative change in their values, as well as their size, which accounts for per capita.

Between the major macroeconomic variables of growth, unemployment and inflation, there are relationships that can be used effectively in economic policy. The relationship between growth and unemployment is reflected in the law Okun, according to which the increase in economic growth provides a proportional decrease in unemployment.

Macroeconomics is the study of aggregate behavior of an economy, i.e. the sum of all decisions of individual households and firms in the economy, seeing such behavior as a whole. The basic approach of macroeconomics, then, is the observation of global trends in the economy, using key variables such as total production, the general level of prices, employment and unemployment, interest rates, wage rates, exchange rates and international trade and the ways in which these vary with time. An important issue in macroeconomics is that government policies, particularly monetary and fiscal policies exert profound effects on global trends, either through the production, prices, international trade and employment, thus resulting the dispute between any of these is optimal to use for best performance of the economy. Macroeconomics is the part of economics that deals with economic relations from an aggregate perspective (Bednar 2003). Therefore addresses the study of the functioning of the economy as a whole, for it focuses on the analysis of aggregate economic variables such as: aggregate production, the overall level of employment or price level. Macroeconomics is the branch of economics that studies the operation of this as a whole. That is, studies the overall economy of a country, whether to ...