Micro and Macro economics

Macro economics is the study of aggregate economic

behaviour of the economy as a whole. Macro
economics deals with the output, (total volume of
goods and services produced) levels of employment
and unemployment, average prices of goods and
services. It also deals with the economic growth of the
country, trade relationship with other countries and
the exchange values of the currency in the
international market.
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Importance of Macroeconomics:

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Macroeconomic Variables:

Macroeconomic variables are indicators or main signposts signaling the current

trends in the economy.

Like all experts, the government, in order to do a good job of macro-managing the
economy, must study, analyze, and understand the major variables that determine
the current behavior of the macro-economy. So government must understand the
forces of economic growth, why and when recession or inflation occur, and
anticipate these trends, as well as what mixture of policy will be most suitable for
curing whatever ills the economy.

1. Economic Output: Economic output or income is measured in terms of the

gross domestic product. A higher rate tends to indicate a more economically
solvent nation.

2. Unemployment Rate: The unemployment rate is the percentage of the

working population that is not currently employed. The percentage only takes
into account the number of people who are actively seeking employment.
Those who are unemployed and not seeking jobs are "voluntarily"
unemployed.

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Inflation Rate:

The inflation rate measures changes in the average price

level based on a price index. The most commonly known
index in the United States is the consumer price index.
This index measures average retail prices that consumers
pay.

Interest Rate:
Interest rates are a reflection of the risk of borrowing. In
terms of macroeconomic reporting, the interest rate is
the nominal rate. Nominal rates are not adjusted for
inflation. Some of the more widely known interest rates
are those for a new car loan, a used car loan, a 15- or 30-
year fixed mortgage and the treasury bond rate.

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