Answer to Question #205347 in Macroeconomics for rahul

Question

Macroeconomics is the study of economy as a whole. What are the variables that figure in the study of economy as a whole? How do these variables interact?

Answer 1

A macroeconomy is a comprehensive view of a whole economic environment, such as a country's economy. It contains information on private-sector activities such as consumer expenditure and private-sector personnel hiring rates. Compiling and analyzing this data allows us to estimate the economy's overall financial health. Gross domestic product (GDP), inflation, unemployment rate, and interest rate are all important factors in a macroeconomic study.

GDP and GDP per capita provide an aggregate picture of productivity to compare with past years, other economies, or as part of a study of global-scale macroeconomics when considering factors such as economic growth. Inflation, in its most basic form, is the pace at which prices rise over time. Smaller factors including the consumer pricing index, fiscal policy, commercial banking, and credit availability all play a role in determining whether inflation rises or falls. Limited credit, for example, can limit the amount of raw materials a business may purchase and, as a result, supply. Unemployment is simply the number of residents who are currently unemployed yet actively looking for work. Individuals who are considered underemployed are included in some unemployment figures. The risk of borrowing is reflected in interest rates (not unlike the emotional price you might pay when borrowing cash from a family member). The interest rate is the nominal rate in macroeconomic reporting. Inflation is not factored into nominal rates. Macroeconomics is a delicate balancing act of measurements, computations, compromise, and cooperation, similar to family dynamics, where harmony and success are achieved by balance.