Answer to Question #187476 in Macroeconomics for Zubair khan

Question

Everyone is affected in some way by macroeconomic issues such as inflation and unemployment, public provision of goods and free market constraints. Keeping this in view how you evaluate the study we did in ten principals of Economics. Please describe how it is helpful in understanding economic decision making. 

Answer 1

The understanding of macroeconomics amongst people gives people the right mentality when it comes to making decisions with regards to happens of the economy. For instance, with regards to inflation, one can be able to understand and make a decision when it comes to saving, in this case, during inflation it is usually not a wise move to invest more so in long-term-fixed investment. This is because, during this time, interests rates are usually falling and the investors may end up loosing a lot of money. Thus, for those individuals with an idea on macroeconomics, upon realizing that inflation is about to start, they will be well knowledgeable with the idea to move money out of long-term- income investment to short-term investments, like money markets. Furthermore, if the individual persist to making an investment during this period, based on macroeconomic analysis, he or she will understand that real-estate and foreign exchange investment will be highly beneficial than any other investment.