Is macroeconomics the same for all countries? What three main differences separate micro- and macroeconomics? First, microeconomics studies individual components, whereas macroeconomics studies the economy as a whole.
Macroeconomics is the study of the economy as a whole. It examines the cyclical movements and trends in economy-wide phenomena, such as unemployment, inflation, economic growth, money supply, budget deficits, and exchange rates. By contrast, microeconomics focuses on the individual parts of the economy.
It studies decision making by households and firms and the interaction among households and firms in the marketplace. It considers households both as suppliers of factors of production labor, land, capital, entrepreneurship and as ultimate consumers of final goods and services.
It also analyzes firms both as suppliers of goods and services and as demanders of factors of production. Because the economy-wide events studied in macroeconomics arise from the interaction of many households and firms, macroeconomics is inevitably rooted in microeconomics.
When economists study the economy as a whole, they must consider the decisions of individual economic actors. For example, to understand what determines gross savings a macroeconomic issuethey must think about the intertemporal choices facing an individual—in response to a certain change in interest rates on deposits, whether to increase or decrease saving by decreasing or increasing consumption a microeconomic issue.
Macroeconomic events and the state of the economy affect all members of society.
Pensioners and people living on fixed incomes have concerns about potential price increases that could affect the cost of living. Unemployed persons looking for jobs always hope that the economy will grow fast so that firms will increase their labor force.
Even politicians are affected by the state of the economy, which could influence the outcome of presidential or congressional elections.
For instance, in purely democratic societies, the popularity of political leaders currently in office could fade in the event of adverse macroeconomic conditions e. It is, therefore, no surprise that economic policy is always a primary issue of debate for candidates during campaigns. For the purpose of such an assessment, three macroeconomic variables are particularly important: Economic growth is, therefore, a sustainable increase in the amount of goods and services produced in an economy over time.
However, economic growth is different from economic development. Noneconomists usually make little or no distinction between the two terms, using them interchangeably.
Development theories have started to look beyond GDP per capita as a sole measure of development and to consider other measures, such as health-care availability, educational attainment, equality of income distribution, and political freedom. GDP growth, though necessary, is not a sufficient condition for economic development.
Modern theories try to explore other requirements for sustainable economic development, including the availability of sound government policies and institutions, infrastructure, lack of trade barriers, and fair judicial systems.
Capital accumulation is an essential factor for economic growth and development, which typically involve large-scale investments in infrastructure, industry, education, health, and financial sectors. Simon Kuznets — argued that levels of economic inequality can change as countries develop and, hence, accumulate more capital.
Presumably, countries at early stages of development have relatively equal distributions of income because levels of per capita income and capital are low. As a country develops, more capital is accumulated and income distribution becomes unequal in favor of the owners of capital. In other words, macro-economists investigate why the economies of many developing countries in AsiaAfrica, Latin Americaand eastern Europe tend to grow at a slower rate than those of developed countries, and how the rate of economic growth for a certain country can be improved over time.
Although sustainable growth is always desired by economic policymakers, economies do not always grow steadily and sometimes undergo periods of slowdown or expansion. Slowdowns in economic growth are called recessions.
Severe economic slowdowns are called depressions e. During recessions, aggregate incomes decrease, as does the demand for goods and services. As a result, firms realize less profit, more firms go out of business, and, therefore, job opportunities become scarce. On the other hand, economies can sometimes grow unusually fast.Macroeconomic factors are national and global events which are out of your control.
The September 11th terrorist attacks, the financial meltdown of and the European sovereign debt crisis of are prime examples of macro factors. Macroeconomic variables, or MVs, are indicators of the overall state of a country's economy.
In the United States, they include the Consumer Price Index, average prime rate, Dow Jones Average and inflation rate. The government studies MVs and attempts to keep them at certain levels in order for the.
The study examines the relationships between the KSE index and a set of macroeconomic variables over sampling period from () to () Statistical tools i.e.
Multiple Regressions and Pearson’s correlation models were used to study the relationship between stock prices (KSEindex) and macroeconomic variables. The . Selected Macro – Economic Variables and its Impact on Chinese and Indian Exports leslutinsduphoenix.com 2 | Page Exchange rate is the price of one country’s money in terms of units of another country’s money (leslutinsduphoenix.com).
In the last decade fluctuations in the official exchange rate of China have been. The study examines the relationships between the KSE index and a set of macroeconomic variables over sampling period from () to () Statistical tools i.e. Multiple Regressions and Pearson’s correlation models were used to study the relationship between stock prices (KSEindex) and macroeconomic variables.
The finding from the test shows (80%) variations in the dependent. This study investigates the impact of the macroeconomic variables on stock returns in Kenya during the period , using the Arbitrage Pricing Theory (APT) and Capital Asset Pricing Model (CAPM) framework for monthly data.