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What is macroeconomics?

Macroeconomics is one of the fundamental branches of economics that strives to explain the structure, behavior, performance, and decision-making of the whole economy. In other words, we can say that macroeconomics ventures into the overall scenario of the economy. The two major areas of macroeconomic research are:

What is Macroeconomics?
  • Long-term economic growth: We can simply define economic growth as the general improvement in the aggregate production in an economy. Macroeconomics tries to highlight the factors that either retard or promote economic growth. These factors are essential in the formulation of policies that will increase development and raise the standards of living.
  • Short-term business cycles: Macroeconomic variables such as national output and employment often go through fluctuations. This phenomenon is known as the business cycle. Some real-world examples are the great depression of the 1930s and the 2008 financial crisis

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Macroeconomics schools of thought

You probably already know that macroeconomics is organized into various schools of thought. Grasping all these theories is the key to acing your assignment. The theories are meant to provide you with differing views on how different markets along with their participants operate. If you are stuck with an assignment based on any of these schools of thought, just send us a “complete my macroeconomics assignment” request.

  1. Classical
  2. The classical school of thought is of the notion that rates, prices, and wages are flexible. Also, markets are clear and can only be prevented from being so by government policies. The classical theory is founded on Adam Smith’s original theories.

  3. Keynesian
  4. The Keynesian school of thought is largely based on the works of John Keynes. It is considered as what led to macroeconomics being seen as a separate area of study. This school of thought majors on aggregate demand as the principal factor in problems like business cycle and unemployment. Keynesian economists believe that the government, through fiscal and monetary policy can actively manage the business cycle. Also, they claim that rigidities in the system like sticky prices can prevent adequate clearing of demand and supply.

  5. Monetarist
  6. It is a branch of the Keynesian school of thought and is considered the brainchild of Milton Friedman. The monetarist theory works within the confines of the Keynesian models. This theory considers monetary policy as the most desirable policy and effective tool for managing aggregate demand. It also agrees that there are some limits to the monetary policy that can make improving the economy ill-advised. Instead, it recommends policies that promote stable rates of inflation.

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Basic and advanced topics in macroeconomics

TopicOverview
InflationThis is the decline of a currency's purchasing power over a given period. The rate at which the purchasing power is declining can be seen in the increase in the average level of prices of selected commodities. The rise of price levels can be expressed as a percentage. It means that one unit of currency buys less than it did previously.

Economic growth
Economic growth is registered when there is an increase in the production of goods and services from one period of time to another. Economic growth can be measured in real or nominal terms. It is traditionally measured in terms of growth national product (GNP) and growth domestic product (GDP). Economic growth can be modeled as a function of:

Human capital
Physical capital
Technology
Labor force
Gross domestic product (GDP)
GDP can be defined as the market value of the goods and services produced by a country within the confines of its borders at a specific time. It is a comprehensive scorecard used by countries to measure their economic health. While GDP is usually calculated on an annual basis, it can also be calculated quarterly. A trade deficit is a situation that occurs when domestic consumers spend more on foreign products than the amount that domestic producers sell to foreign consumers.
UnemploymentUnemployment is also another key indicator of economic health. It is a situation when a job seeker is unable to find work. Unemployment is often measured by dividing the number of unemployed people by the number of people in the labor force.

The other topics that we can assist you with are:

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