Macro economics is the study of the behavior of the economy as a whole. it examines the forces that effect many firms ,consumers ,and workers at the time.
Micro economics studies individual prices, quanities and markets
OutputTwo ways to measure GDP: Nominal GDP measured in actual market prices Real GDP calculated in constant and invariant prices.Economic growthPotential GDP• It represents the maximum sustainable level of output that the economy can produce.• when an economy is operating at its potential there are high levels of utilization of labour force and the capital stock.
• Consumer price index• The average price goods and services bought by consumers.• The overall price level is denoted by p Economist measures price stability by looking inflation rate.• The inflation rate is the percentage change in the overall level of prices From one year to the next.
A high and growing level of national output High employment with low unemployment A stable or gently rising price level.
Fiscal policy denotes the use of taxes and government expenditures. Government expenditures come into two distinct forms government purchases government transfer taxation
The second major instrument of macro economic policy is monetary policy, which governments conducts through managing the nations money, credit,and banking system
Economic growth represents the expansion of a country’s potential GDP The related concept is the growth rate of output per person. Economic growth involves the growth of potential output over the long run. the growth in output per capita is an important objective of government because it is associated with raising average real incomes and living standereds.
Human resources. Natural resources Capital formation Technology.
Economist write relationship in terms of an aggregate production function,which relates total national output to inputs and technology, the APF is Q=AF(k,L.R) q-output k-productive services of capital l-lobor inputs R-natural resource inputs. A-level of technology in the economy F-production funtion