Briefly Describe the Term Macro Economics (GC003)
Table of Content
1.0 Task
1.1 Macro Economics.
1.2 Three types of economies.
1.3 Economic problem of scarcity.
1.3 How supply and demand in the market establish the price of a product
1.3.1 Demand.
1.3.2 Supply
1.3.3 Price determination/ establishment
2.0 Task
2.1 GDP.
2.2 Interest rate.
2.3 Inflation.
2.4 Function of Money.
2.5 How economic and financial data might be of useful information for optimal decision making.
2.5.1 How economic data is useful in optimal decision making.
2.5.2 How financial data is useful in decision making.
3.0 Task 3.
3.1 How analytical tools can be applied to predict the economic consequences due to changes in various factors in the economy of a country.
3.1 Economic statistics (data).
3.1.2 Economy Survey techniques.
3.1.3 Methodology of national accounting.
3.1.4 Time-series data measurement
3.1.5 Studies of experimental economics.
3.1.6 Assessing the current situation.
3.1.7 The use of indicator models.
3.1.8 Key variables and relationships.
3.1.9 Forecast Entry system.
3.1.10 Fiscal analysis.
4.0 Reference
1.0 Task 1
1.1 Macro Economics
Macroeconomics is the study of whole economic systems aggregating over the functioning of individual economic units. This is the branch of economics concerned with aggregates, like national income, consumption, and investment (Arthure and Steven, 20011). It is primarily concerned with variables that follow systematic and predictable paths of behavior and can be analyzed independently of the decisions of the many agents who determine their level. In a word, it is a study of national economies and the determination of national income (about.com, 2013).
Macroeconomics can be best understood by studying the microeconomics that considers the decisions made at an individual or firm level. Macroeconomics considers the larger picture, or how all of these decisions sum together. An understanding of microeconomics is significant to understand macroeconomics. To know why a change in interest rates leads to changes in real GDP, we need to know how lower interest rates influence decisions, like the decision of how much to save, at the firm or household level. Once we understand how an individual, on average, will change their behavior we will then understand the large-scale relationships in an economy.
Macroeconomics considers the performance of the economy as a whole. Macroeconomics issues include economic growth; inflation; changes in employment and unemployment, our trade performance with other countries (i.e. the balance of payments) the relative success or failure of government economic policies and the decisions made by the Bank of England (Robert and Gordon, 2009).
For example: in the case of a closed economy a study of income, saving, consumption, employment, etc are macroeconomics on the other hand in the case of the open economy all these are micro-economics.
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1.2 Three types of economies
Three types of economies are the Market Economy, the Planned Economy and the Mixed Economy. The planned economy is also called as a command economy. In the Market Economy, consumers decide which goods and services they want and which businesses provide these. Most of the businesses in the market economy are privately owned. The USA is a model of a market economy.
In the planned economy, the government has control of society and makes all the decisions. The key difference between the planned economy as well as the marketing economy is, the market economy doesn’t have a fixed amount of products that they have to make. However, in the market economy, the government’s role is limited to providing legislation to protect businesses and consumers and ensuring no single business or organization restricts competition.
On the other hand, the planned economy can’t afford any luxury items like mobile phones and prices are fixed by the government. There is no competition in the planned economy because of government control over them. (Robert and Gordon, 2009). The mixed economy is the combination of both planned and market economies. The mixed economy shares the same attributes to both the planned and the market economy because the government controls some of the resources and the market controls the rest.
This means both the government and businesses have control over the goods and services. There is one more economy is practiced that is the traditional economy. This is an economic system in which people make economic decisions based on their customs and beliefs which have been handed down from one generation to the next…………….
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