Please follow directions: REPLY TO BOTH STUDENTS SEPARATELY WITH A MINIMUM OF 250 words each
Discuss the three primary concerns in macroeconomic analysis.
Respond to both students separately with a minimum of 250 each
The three primary concerns in macroeconomic are inflation, unemployment, and gross domestic product (GDP).
GDP is primarily used to measure the economy’s operation. GDP is the “total market value of all final goods and services produced in a given year” (Rittenberg & Tregarthen, 2014, p. 113).
Unemployment is important to the macroeconomy because when there is unemployment, there are resources that are going unused. In the classical theory, it says that if involuntary unemployment does not exist because people who are currently not working will get hired again because of the need to buy products. People will accept lower wages. In the Keynesian employment theory, it says that workers will not take work where the wages are too low because it does not allow them to live adequately. Therefore, they will continue to be unemployed to find a higher paying job. The Keynesian employment theory, also, states that if companies put production cost above employee volume unemployment will exist.
Inflation is “the rate of change in the average price level for the entire economy” (Rittenberg & Tregarthen, 2014, p. 15). When inflation increases, currency value decreases. Although, deflation sounds good because the value of currency increases, many consumers will hold on to their money due to the hope of getting a lower price.
(Aggregate demand is the overall amount a household is willing and able to buy. Aggregate supply is the total amount of goods that firms produce.)
Both unemployment and inflation can/ have led to a recession. The Classical range and the Keynesian range are opposite when it comes to reducing inflation. The Classical range states that increasing aggregate demand will increase inflation and decreasing aggregate demand will decrease inflations. This range matches the theory that employment is always full, and prices will adjust to the economy. The Keynesian range is the complete opposite. Also, stating that before firms will cut prices, they will cut employees.
Please let me know if any of the information I stated above is incorrect. Above is how I understood the readings. Thank you!
The three primary concerns in macroeconomics are: Gross Domestic Product (GDP), unemployment/employment and Inflation
What i got out of the reading, was that the GDP is the total amount of goods and services a country produces. Analyst look for the reason of why the cycles took place, which could be government policy, consumer behavior or international phenomena among other things. The GDP is measured by either adding all of the income earned in a economy or by all the spending in an economy which technically should be equal. The way the GDP affects the stock market is through its effect on inflation. When the economy has witnessed growth from period to period the GDP would grow. which is because when the real GDP levels rise. the output is higher. more laborers are needed to keep up with the greater levels of production.Than you have the unemployment and employment. US citizen who are already working represent the employed,while those who are actively looking for work but haven’t found it yet are the unemployment. When labor market data shows that the unemployment rate is low, the stock market is usually expected to go up. Since more people are employed, consumer spending will increase, which leads to an increase in GDP. Inflation is a significant indicator for securities markets ,if the output gap is small or nonexistent an increase in GDP means the output gap will decrease even more which means the economy stands a greater risk of inflation. And inflation is bad for the stock market so it goes down on what would normally be considered good news.Inflation, GDP, and employment data all exert a significant influence on the stock market. All three are closely interrelated and a change in any single factor can have a significant trickle-down effect.