Economics
Macroeconomic Questions
Macroeconomic questions pertain to the study of the economy as a whole, focusing on factors such as inflation, unemployment, economic growth, and government policies. These questions seek to understand the broader impact of economic decisions and events on society, and they often involve analyzing aggregate measures such as GDP, national income, and overall price levels.
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7 Key excerpts on "Macroeconomic Questions"
eBook - PDF- David Shapiro, Daniel MacDonald, Steven A. Greenlaw(Authors)
- 2022(Publication Date)
- Openstax(Publisher)
This chapter will look at macroeconomic policies around the world, specifically those related to reducing unemployment, promoting economic growth, and stable inflation and exchange rates. There are extraordinary differences in the composition and performance of economies across the world. What explains these differences? Are countries motivated by similar goals when it comes to macroeconomic policy? Can we apply the same macroeconomic framework that we developed in this text to understand the performance of these countries? Let’s take each of these questions in turn. Explaining differences: Recall from Unemployment that we explained the difference in composition and performance of economies by appealing to an aggregate production function. We argued that differences in productivity explain the diversity of average incomes across the world, which in turn were affected by inputs such as capital deepening, human capital, and “technology.” Every economy has its own distinctive economic characteristics, institutions, history, and political realities, which imply that access to these “ingredients” will vary by country and so will economic performance. For example, South Korea invested heavily in education and technology to increase agricultural productivity in the early 1950s. Some of this investment came from its historical relationship with the United States. As a result of these and many other institutions, its economy has managed to converge to the levels of income in leading economies like Japan and the United States. Similar goals and frameworks: Many economies that have performed well in terms of per capita income have—for better or worse—been motivated by a similar goal: to maintain the quality of life of their citizens. Quality of life is a broad term, but as you can imagine it includes but is not limited to such things as low level of unemployment, price stability (low levels of inflation), and the ability to trade.
eBook - PDF- Neva Goodwin, Jonathan M. Harris, Julie A. Nelson, Brian Roach, Mariano Torras, Jonathan Harris, Julie Nelson(Authors)
- 2019(Publication Date)
- Routledge(Publisher)
a. Changes in the average price level in the economy b. A business deciding on the prices at which to sell its products c. The value of the total level of production in an economy d. Understanding the impacts of tax policies on government budgets e. An individual deciding on whether to take up some part-time work 2. Are you familiar with the following terms? While you will study them in detail in this course, see how well you can come up with a definition for them just from your previous knowledge. (It does not matter at this point if you are not familiar with them.) unemployment recession inflation economic boom economic growth money development fiscal policy GDP monetary policy investment sustainability 2. M ACROECONOMIC G OALS We have introduced the idea of an economy working “well” or “badly” and have referred to high unem-ployment, persistent high inflation, and destruction of the natural environment as bad things that virtu -ally no one wants. “Bad” and “good” are value-laden terms. Do they belong in an economics textbook? As noted in Chapter 1, social scientists often make a distinction between positive questions, which concern issues of fact, or “what is,” and normative questions, which have to do with goals and values, or “what should be.” Much of macroeconomic analysis is concerned with positive issues. Using both empirical evidence and various theories, we describe — using the best available economic research — how an economy functions at the macro level. However, a more compelling reason for anyone to study macro-economics is to try to understand how we — as a society, country, and world — can reach our desired goals. Thus we cannot avoid the normative question of what goals the macroeconomy should achieve. Not everyone has the same goals, either at a personal level or as part of their idea of a “good” society. However, agreement becomes easier at a more general level.
- Berkeley Hill(Author)
- 2013(Publication Date)
- Pergamon(Publisher)
CHAPTER 8 Macro-economics—the workings of the whole economy MACRO-ECONOMICS is the study of how the economy as a whole works. Up to now we have been looking at bits of the economy separately - offer-ing explanations for how consumers behave, how individual firms organise themselves, how the demand for the resources available for production arises at the firm and industry levels etc. — but we must bear in mind that all these elements are linked together and react with each other as broad aggregates (or totals) e.g. aggregate output, which is the total output of all firms in the economy. It is important to try to understand how the aggregate economy works because many of the economic problems which have to be faced in the present century are not caused by the action of single individual consumers or firms, and the action of individuals cannot remedy them. They are not restricted to isolated fragments of the economy but are essentially collective both in cause and remedy. Some of the basic macro-economic problems are these; the problem of maintaining the value of money to prevent the harmful effects of infla-tion; of ensuring that the country's productive resources are so employed (especially manpower) that as high a living standard as is attainable within the limits set by the resources available is achieved; of encouraging eco-nomic growth; of encouraging beneficial trade with other countries and simultaneously achieving stable exchange rates between national curren-cies. All these problems can only be tackled from a combined (or aggregate, or national) standpoint. As was noted in the preceding chapter, the early economist Adam Smith believed that, as long as each member of society acted in his or her own business interest, the national economy would automatically take care of itself and the interests of society would also be best served. It I.E.S.A. — Q 231
eBook - PDF- Manzur Rashid, Peter Antonioni(Authors)
- 2015(Publication Date)
- For Dummies(Publisher)
Unsurprisingly, macroeconomists disagree about many of these issues. Nevertheless, a common body of knowledge has developed on which most macroeconomists agree. In this chapter, we present the central questions that fascinate macroecono‑ mists. You also see how economists look at the world and how this helps them to answer difficult questions. Finally, we introduce some concepts in economics that frequently confuse newcomers. By nipping them in the bud now, you will be well on your way to understanding the economy! Seeing the Questions that Intrigue Macroeconomists If you want to understand something, the obvious starting point is to ask pertinent questions: why does the phone ring as soon as you step into the shower? Why is it almost impossible to find a matching pair of socks? What’s the point of celebrity chefs? 22 Part I: Getting Started with Macroeconomics This section introduces the key questions of interest to macroeconomists and gives you an idea about why these questions are important. The ideas intro‑ duced here come up over and over again in this book, so don’t worry if you still have questions the first time around – we’ll do our best to answer them! In this section we take a look at some of the core questions that keep macroeconomists up at night (fortunately none involve Gordon Ramsey!). Why are some countries rich and others poor? Of all the questions in economics, this is the big‐un. Why are living standards in rich countries such as the US so much higher than in poor countries like Bangladesh? (To give you an idea: average annual income in the US is over $50,000, while in Bangladesh it’s around $1,000.) Can Bangladesh take any actions to make its people richer? If so, what are they? These kinds of question are so pressing and so important that the Nobel Prize–winning economist Robert Lucas said that, ‘once one starts to think about them, it is hard to think about anything else’.
eBook - ePub- Tom Craig, David Campbell(Authors)
- 2012(Publication Date)
- Routledge(Publisher)
It examines the national and international aspects of economics and how national economic policies affect individual households, consumers and businesses. Macro-economics is also concerned with the ways in which the state manages the economy by using the range of economic ‘levers’ or ‘weapons’ at its disposal (Figure 9.1). Figure 9.1 Different branches of economics. Micro- and macro-economics – an imperfect metaphor If you look at a picture from a great painter, you can appreciate it on two levels. From a distance you can enjoy the totality of the painting, its spatial arrangements, the configurations of the figures, the blends of light and shade, the colours, and so on. If you then approach the painting and examine it in detail, possibly with a magnifying glass, you can analyse the intricate individual brush strokes, the textures and the individual colour amalgams. Whilst we mainly see the big picture, we can readily appreciate this would not exist without the intricate, painstaking work invested in each stroke. The quality of the painting comprises both levels of appreciation. We can view macro-economics as our view of the total painting and micro-economics as our examination of the intricate strokes and textures. Macro-economics concerns the effects of thousands or even millions of individual micro-economic decisions. The Macro-Economic ‘Environment' Given that macro-economics concerns the ‘big picture’ of economics, it is reasonable to ask what the components of the macro-economic environment are inasmuch as they can affect business (which, after all, is the subject of this book). The macro-economic environment includes such national and international concerns as: levels of tax levied by the government; levels of public expenditure (i.e. spending by the state); the price of borrowing money (i.e
eBook - PDF- Graham Mallard(Author)
- 2017(Publication Date)
- Red Globe Press(Publisher)
3 introducing larger-scale analysis: the macroeconomic world the next four chapters In Chapters 5–8 we analysed the behaviour of individual actors and what results when they interact with one another in individual markets: what I refer to as smaller-scale analysis. We now put them all together to examine the functioning of the economy as a whole. We approach economics in a way that makes individual actors and markets blend into the bigger picture. This is larger-scale analysis. This is macroeconomics . Key term: macroeconomics Macroeconomics is the study of the economy as a whole: the bigger picture. The purpose of studying macroeconomics is for us to understand what determines how wealthy an economy is, and how that wealth can be increased; what causes the two main economic problems of unemployment and inflation, and how they can be reduced; and how economies interact with one another in the global marketplace and the benefits they derive from doing so. 3 3 introducing larger-scale analysis: the macroeconomic world 152 Introducing the bigger things is the purpose of the following four chapters. Working through them will enable you to read and understand the economic issues featured in any financial newspaper. It will also enable you to engage in current economic debates. For example, how wise is it for the government to be cutting its expenditure when the economy has just come out of recession? In what follows, then, we: 1 Introduce the economy and examine what determines its size and how this can be measured (Chapter 9). 2 Develop and use the tools of demand and supply analysis, but at the level of the whole economy rather than at that of a market (Chapter 10). 3 Investigate the causes and consequences of unemployment and inflation, and what the government can do to reduce them, as well as the role of money (Chapter 11).
- Valentina Feklyunina, Stephen White, Valentina Feklyunina, Stephen White(Authors)
- 2014(Publication Date)
- Taylor & Francis(Publisher)
2 In many new European Union (EU) member states that had been getting rid of the constraints of the non-market command economy, the crisis raised questions about the costs as well as the benefits of integration into a global economy. Nor were countries that sought to adopt a more mercantilist or statist approach to the global economy exempt, as illustrated by the contraction of the Russian economy.Individuals likewise differ in their capacity to respond to macro-economic difficulties. People with more human capital ought to be better able to weather an economic storm, but the poor, the elderly and unemployed may become even worse off. However, because the crisis started in banking and financial services, it immediately rendered vulnerable people who had financed their very high level of consumption on credit. For people socialized into the communist command economy, the disturbances created by the 2008 crisis were nothing compared with the upheavals that followed the collapse of the power of the commanders of the command economy and its transformation into a market economy.3Because macro-economic data are produced on a daily basis by the market and monthly by national and intergovernmental organizations, they provide a quick source of information for evaluating the consequences of policy. The speed and sources of macro-economic data encourage policy-makers and journalists to draw inferences from national economic aggregates about their putative effect on individual attitudes and behaviour. In a stable economy, such inferences can be more or less valid: for example, more people are likely to become unemployed if GDP contracts. However, even when the level of unemployment doubles, the great bulk of the labour force remains in work. Moreover, periods of high unemployment are not necessarily periods of high popular unrest, as illustrated by Conservative government in Britain in the 1930s.Micro-economic data are required to assess the effect a macro-economic crisis has on the lives of ordinary people. Such data are readily available from surveys generated by national governments and on a comparative basis by the Eurobarometer, funded by the EU. Thus, it is not necessary to draw inferences about micro-economic attitudes from macro-economic data. Nor is it justifiable to draw inferences from abstract theories of economic behaviour that assume that individuals will respond in the same way whatever their national context is. A cross-national and cross-cultural approach is needed to test the limits of universalistic assumptions about the irrelevance of national or temporal context. Universalistic theoretical assumptions can be tested for falsification by empirical evidence from multi-national surveys.
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