By Pooja Borkar
By Pooja Borkar
By Pooja Borkar
Macroeconomics provides a bird's eye view of the economy. It aims at studying the relationship between a country's gross domestic product (GDP), inflation rate and interest rates, government fiscal and monetary policies on the national economy.
Top articles discussed in macroeconomics basics are as follows -
Macroeconomics is a ‘top-down’ approach and in a way, a helicopter view of the economy as a whole. Here we discuss the basics of Macroeconomics.
This macroeconomics basics article discusses the 10 indicators that are quite critical in today’s times given all the imbalance occurring in the financial world. Do read the nuts and bolts.
Real GDP doesn’t compute the GDP at a current market price.
Nominal GDP is the sum-total of all the goods, finished products, services produced during a particular year at the current market price.
Nominal GDP is sum-total of the economic output produced in a year valued at the current market price. Whereas Real GDP is sum-total of the economic output produced in a year values at the pre-determined base market price.
Monetary policy is “liquidity”. The central bank of a country needs to use this liquidity in the economy to ensure economic growth.
Fiscal policy is prepared to ensure economic growth of a country.
Fiscal policy helps to control the spending and revenue collections of government to influence the economy at large. Whereas Monetary policy is the tool for the central bank through which the movement and the flow of money in the economy is controlled.
Current account records all trading related fund inflows and outflows. Whereas Capital account is much bigger than the current account; because it deals with capital investments and expenditures.
Balance of trade simply deals with the export and import of goods. Whereas Balance of payment is a much broader concept. It includes balance of services, balance of unilateral transfers, and balance of payment on capital account.
Open market operation is a monetary policy tool used by the central bank of the Country to either increases or decreases the money supply in the economy by sale or purchase of government securities.
Expansionary policy helps in encouraging economic growth by increasing the money supply, lowering interest rates, increasing aggregate demand.
Contractionary Monetary Policy is when the total supply of money in the economy is reduced and interest rates are raised to combat monetary policy inflation.
Rate of inflation formula helps to understand how much the price of goods and services in an economy has increased in a year.
Hyperinflation is a situation in which the inflation goes completely out of control.
Normative Economics is the opinions of economists who tell us what they think. It can be true for some and false for some. And these statements mentioned under normative economics aren’t verifiable.
Positive economics talks about things that “are”. They are facts. They can be verifiable.
Positive economics talks about things that “are”. They are facts. They can be verifiable. Whereas Normative Economics is the opinions of economists who tell us what they think.
Quantitative Easing is an expansion of the Open Market Operations of the Central Bank.
Explanation of Brexit for students and professionals, is it good or bad and its short term and long term impacts.