Macroeconomic Fundamentals

Summary:

This Macroeconomic Fundamentals note covers the scope of the subject, including major macroeconomic objectives and national issues. It explores economic growth, its sources, and instability, as well as the business cycle and its implications on employment and price levels. By studying this unit, learners should be able to define macroeconomics, describe macroeconomic policy objectives, explain economic growth and instability, discuss sources of economic growth, and understand the business cycle. The unit introduces key terms such as business cycle, economic growth, full employment, recession, and macroeconomics. Macroeconomics focuses on the economy’s behaviour as a whole, analyzing factors like output, inflation, unemployment, the balance of payments, and exchange rates. The main macroeconomic policy objectives include sustainability in economic growth, full employment, price stability, the external balance of trade, equitable distribution of income and wealth, and increasing productivity. Major macroeconomic issues covered in this unit include economic growth, full employment, inflation, balance of payments, and exchange rates. Economic growth is the increase in the gross national product over time, which can be measured in terms of real GDP or real GDP per capita. Economic growth has positive effects such as increased employment, improved living standards, infrastructure expansion, increased investment, and improved technology. However, it also has negative effects, such as environmental threats, resource waste, unequal distribution of wealth, and urbanization challenges. The arithmetic of growth can be estimated using the Rule of 70, which calculates the approximate number of years it takes for an economic indicator to double.

Excerpt:

Macroeconomic Fundamentals

Unit 1: NATURE AND SCOPE OF MACROECONOMICS

1. Introduction In Unit 1, you will learn about the scope of macroeconomics, which mainly covers major macroeconomic objectives and issues of national concern. The unit also offers to you economic growth, its sources, and instability in the economy. Furthermore, this unit discusses the business cycle, its major causation factors, and the implications for employment and changes in general price levels.

Learning Outcomes By the end of your study of this unit, you should be able to:

• Define macroeconomics
• Describe the main macroeconomic policy objectives and issues
• Explain economic growth and instability
• Describe sources of economic growth
• Discuss the business cycle.