What is The Best Definition of Macroeconomics?
The concept of macroeconomics
Macroeconomics is defined as a branch of economics that deals with the study of the market or other systems with a wide scope of work. Macroeconomics deals with the study of phenomena (unusual matters) related to the economy, including: the continuous rise in the general price level; That is, inflation, the rate of economic growth, national income, gross domestic product, and changes in unemployment. The macroeconomist examines the causes of unemployment, the causes of inflation, and the factors that create or stimulate economic growth. It considers unemployment, inflation, and the rate of economic growth as part of the elements of the overall economy.
Macroeconomic policies are based on providing an economic environment that enjoys sufficient stability to promote general economic growth. Which in turn reduces unemployment rates by creating new job opportunities, increases wealth and improves the standard of living of individuals, and the main macroeconomic policies are as follows:
*. Fiscal policies: It deals with research in the field of government spending, imposed taxes and their types, and types of government borrowing.
*. Monetary policies: which relate to the cash rate.
*. Currency exchange rate policies.
*. inflation policies.
*. Policies for employment and employment levels versus unemployment levels.
The importance of this branch of science appears in that it provides answers and sufficient information about:
@. The general causes and effects of increasing the general rates of unemployment in the country.
@. Factors affecting the increase in inflation rates.
@. Factors affecting in a positive way on economic growth in terms of development, stimulation and promotion.
@. Factors affecting the process of improving economic performance within its affiliate systems.
@. Factors that drive progress and move the economy.
@. Theories aiming to achieve the best performance achieve the best achievements at the level of the economy.
@. Solutions to economic problems represented by the continuous decline in the prices of goods or the continuous rise in the prices of goods and services, or the state of poverty and low income.
Principles of macroeconomics
The principles of macroeconomics are as follows:
*. The state’s annual production (national income): This principle deals with the financial ratios resulting from the employment process, public capital, and natural resources.
*. Increase in the general price index (inflation): including factors that reduce purchasing power. This principle aims to maintain the lowest level of inflation in the country.
*. Statistical description of economic performance (economic output): It includes the output of all national goods and services.
*. Trade (international trade): It includes what is exchanged of goods, services and raw materials between countries, and what affects the country financially.
The following are the most important macroeconomic goals:
*. Reducing the level of unemployment and raising the level of employment, which helps to raise the general level of national income and thus raise living standards.
*. Achieving the best level of economic growth or achieving an acceptable rate in order to achieve stability in economic growth and get rid of fluctuations.
*. Maintaining security and stability in price levels, by maintaining production levels and working to increase them.
Factors affecting the overall economy
The following are the most important factors affecting the overall economy:
*. Monetary policies: They are the plans and policies adopted by the central banks in the country or any entity with financial and monetary authority and implemented by public institutions and agencies, which aim to achieve the best financial increase. These policies include the most important plans taken during periods of economic recession through the implementation of a reduction mechanism. prices, as well as policies aimed at reducing the money supply; That is, the amount of money that is allowed to be traded in exchange for interest rates on it.
*. Fiscal policy: These policies include all the procedures and operations taken by the various institutions, which include public accounting systems, including loans, taxes, and spending. Reducing the proportion of money in circulation in return for increasing taxes.
*. Interest rates: It is the rate approved by central banks for bank rates in transactions, which greatly helps to increase investment rates; Which leaves an impact on public spending and thus increases the positive impact on the overall economy.
*. The exchange rate: This factor may be considered one of the most important factors influencing the overall economy, as the value of the country’s currency helps to raise the price of the country’s imports in exchange for reducing the proportion of its exports, which has an impact on the national product and an increase in the level of public income.
The difference between macroeconomics and microeconomics
The following are the most important differences between macro and micro economics:
Fields studied: Macroeconomics studies the economy as a whole, including decisions and plans in all working details affecting the individual, society and the state, while microeconomics studies the financial movements, decisions and plans of small individual institutions and companies.
The benefit of studying it: Macroeconomics deals with statistical details that include the principles of economics such as national income, spending and consumption on a general level, while microeconomics studies these details on an institutional level. Therefore, decisions taken on macroeconomics benefit the state, while in microeconomics they return to the institution.
Its positive impact: Macroeconomics helps to leave a positive impact on public operating sectors linked to other countries, while microeconomics helps to raise the percentage of decisions that have a positive impact on small practical sectors within the country.
Its impact on the labor force: Macroeconomics helps to raise the rates of the labor force by working to reduce the general unemployment rate in the country. It also deals with issues of inflation and currency exchange, while microeconomics does not address the achievement of such goals, especially on a large scale.
Its impact on economic security: the macroeconomy works to maintain safe economic levels for the state, and achieves the necessary balance through the procedures and decisions taken by the authorities concerned with legislation, while the microeconomy maintains the economically secure level of the institution or company or within the small economic areas in society.
Economic performance: Macroeconomics is based on the study of economic performance as a whole, while microeconomics is based on the study of economic performance at the level of the individual, institution, or company. Thus the macroeconomic implications are of a more general effect compared to the microeconomic.
There are many macroeconomic theories, but in general it is a branch of commercial science that deals with the study of general economic systems that have a general impact on the state. It studies the rates of changes in economic growth, purchasing values in public markets, and general values of exchange. It also deals with the state of unemployment in return for increasing the proportions of the labor force.
Macroeconomics is based on providing secure foundations to achieve the best economic level for the state, and its importance lies in providing the necessary solutions about what can be done with regard to macroeconomic problems, especially with regard to inflation rates, unemployment and economic performance. Balance in the macroeconomy is considered one of the factors that achieve maximum benefit. It is possible from it, and it avoids falling into macroeconomic problems, and the effectiveness of the performance of economic sectors can be tested through macroeconomic indicators.