Economics_-_Macroeconomics

Macroeconomics studies the performance and behavior of the economy as a whole. Macroeconomists attempt to predict economic circumstances to help buyers, businesses, and government make better decisions by focusing on three economic indicators: national output (measured by gross domestic product), unemployment, and inflation. The Gross Domestic Product (GDP) is a coincident indicator (moves as the economy does) that measures the activity of the economy. Percentage growth of GDP (growth) and an index of GDP level (GDP) are used to indicate recessions, which often precede external crises (Meleckey, 208). The unemployment rate measures the number of people that are unable to find work. The third indicator, inflation, determines the rate at which prices rise. Inflation is mainly measured through the Consumer Price Index and GDP deflator (Heakal, 2009). The Financial Forecast Center (1997-2009) reflects a decrease in the inflation rate since August 2008. The current inflation value is -0.62 and was 5.4 in August 2008. However, it is predicted that inflation will rise to 0.4 in December 2009. Leading indicators of the economy are indicators which change before the economy does. Examples of such indicators are stock market returns, changes in hours worked per week, and changes in outstanding credit. These indicators tend to decline before the economy declines and improves before the economy begins to pull out of a recession. Conclusion Macroeconomic studies the structure and performance of an economy as a whole (Chatterjee, 2009). The economy performance is important to all citizens. Macroeconomy is measured by looking at national output, unemployment and inflation. Although the consumers are who ultimately determines the direction of the economy, economic indicators help us understand where we are and where we are going. Reference Chatterjee, S. (2009). The Peopling of Macroeconomics: Microeconomics of Aggregate Consumer Expenditures. Retrieved May 18, 2009, from University of Phoenix EBSCOhost. Heakal, R. (2009). Macroeconomic Analysis. Retrieved May 18, 2009, from http://www.investopedia.com Meleckey, M. (2008). Anticipation, External Crises, and Output Growth in Emerging Market Economic. Eastern European Journal of Economics, 46 (3). Retrieved May 20, 2009. The Financial Forecast Center (1997-2009). Retrieved May 19, 2009, from http://www.forecasts.org/inflation