Macroeconomic Terms Essay

789 WordsDec 9, 20144 Pages
Macroeconomics is the branch of economics that deals with the entire economy. Theories: Fiscal Policy Tax- It is imposed so that the govt can earn tax revenue & goals. Monetary policy- Govt can increase or decrease money supply. Macroeconomic problems: High inflation rate, high unemployment rate, high interest rate, low economic growth etc. Macroeconomic Goals : Price Stability; Low Unemployment; High and Sustained Economic Growth. Macroeconomic policies: Fiscal Policy: Changes in government expenditure and/or changes in taxes to achieve particular macroeconomic goals. Monetary Policy: Changes in the money supply or the rate of growth of money supply, to achieve particular macroeconomic goals. CPI is based on a representative group of goods and services purchased by a typical household and represent “market basket”. Fixed weight price assumes the same items are bought. Substitute Bias is when one good is substituted for another. ( beef or chicken) Chain-Weighted Price Index corrects for the substitution bias found in fixed weight measures. Classifying the Unemployed: Job Loser: was employed in the civilian labor force, was either fired or laid off. Job Leaver: was employed in the civilian labor force, quit his or her job. Reentrant: A person who was employed, hasn’t been for a period of time and is reentering the labor force. New Entrant: A person who has never held a full time job for two weeks or longer. Unemployed persons = Job Losers+ Job Leavers +Reentrants + New Entrants Discouraged Workers: A person who gives up looking for a job, for whatever reason, is no longer considered part of the unemployment rate, because the person has stopped looking for work. Types of Unemployment Structural- Structure change in technology and environment. Frictional- Switching from one job to another job. Cyclical- Occurs due to downturns in overall business. Seasonal-

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