This document provides an introduction to macroeconomics. It defines macroeconomics as the study of aggregate economic indicators for an overall economy, such as GDP, unemployment, and inflation. The document distinguishes macroeconomics from microeconomics, which focuses on individual markets and decision-making of consumers and businesses. Finally, it outlines several objectives of macroeconomics policy, including price stability, economic growth, and full employment.
2. Differentiate between macroeconomics and
microeconomics:-
Understand the major issues addressed in
macroeconomics such as aggregate demand and
supply, inflation and GDP
Identify and explain the macroeconomics
objectives
Describe the business cycle in economics
3. Macroeconomics deals with the aggregate
behavior of the economic agents such as
markets, household individuals and
businesses
An aggregate is a collection of specific
economic units treated as if they were one
unit
Macroeconomics, therefore, deals with the
overall nature of the economy such as
inflation and national income,
4. Macroeconomics is a branch of the
economics field that studies how the
aggregate economy behaves.
In macroeconomics, a variety of economy-
wide phenomena is thoroughly examined
such as, inflation, price levels, rate of
growth, national income, gross domestic
product and changes in unemployment.
5. Macroeconomics differs from
microeconomics, which focuses on smaller
factors that affect choices made by
individuals and companies. Factors studied
in both microeconomics and
macroeconomics typically have an influence
on one another. For example, the
unemployment level in the economy as a
whole has an effect on the supply of
workers from which a company can hire.
6. Macroeconomics, in its most basic sense, is
the branch of economics that deals with the
structure, performance, behavior and
decision-making of the whole, or aggregate,
economy, instead of focusing on individual
markets.
7. macroeconomics study aggregated indicators
such as unemployment rates, GDP and price
indices, and then analyze how different
sectors of the economy relate to one another
to understand how the economy functions.
Macroeconomists develop models explaining
relationships between a variety of factors
such as consumption, inflation, savings,
investments, international trade and finance,
national income and output.
8. Contrarily, microeconomics analyzes how
individual agents act, namely consumers
and corporations, and studies how these
agents' behavior affects quantities and
prices in certain markets.
Such macroeconomic models, and what the
models forecast, are used by government
entities to aid in the construction and
evaluation of economic policy.
9. Prior to the 1930s, there was little concern for
macroeconomic issues, and thus, the literature
was limited.
However, with the emergence of America’s Great
Depression from 1929-1939, there were intensive
write ups and publications focusing on what
caused the crisis and it was overcome.
The period of depression was characterized by
low productivity, high unemployment, low
effective demand, business failures, etc.
10. Keynes advocates that depression and high
unemployment cause insufficient private
spending
Thus, to stimulate spending and overcome
the crisis, governments must embark on
massive public spending, such as road
constructions and other capital projects
11. A business cycle refers to the upward and
downward movements of an economy or
changes in the economic activities of a nation.
When businesses are making profits,
employment reaches its peak, then economic
growth becomes high and the country is well off.
On the other hand, when businesses are facing
tough time, demands for products become very
low, unemployment worsen, thus, depression
sets in which requires government intervention
to activate demand from consumers.
12.
13. micro and macroeconomics are interconnected
and interrelated and most of the time share the
same root
Microeconomics is the study of choices that
individuals and businesses make, the way these
choices interact in markets, and the influence of
governments (Parkin, 2008)
Macroeconomics, on the other hand, is the study
of the performance of the national economy and
the global economy (Parkin, 2008)
15. Islamic economics is the study of human behavior
with regard to acquiring and using resources for
the satisfaction of their necessities, needs and
other desires (Kahf, nd) in line with Islamic
principles
Therefore, the study of Islamic economics is
divided into two parts:
Firstly, the study of the economic system of Islam
Secondly, analyzing the human behavior and
institutions
16. Chakra 1979 and Chapra (2005) identified
macroeconomic objectives of Islamic economic
system as follows:
Economic well-being within the framework of
the moral norms of Islam;
Universal brotherhood and justice;
Equitable distribution of income;
Availability to everyone of an opportunity to
earn an honest living;
Freedom of the individual within the context of
social welfare; and
Growth and Stability
17. Parkin, Michael (2008) Macroeconomics, Eight
Edition, Pearson Education Inc.
McConnell, Campbell R. and Brue, Stanley L. (2005)
Economics, Sixteenth Edition, McGraw-Hill
Frank, Robert H. and Bernanke, Ben S. (2009)
Principles of Economics, Fourth Edition, McGraw-Hill
Slavin, Stephen L. (1996) Economics, Fourth
Edition, Irwin
Chapra, Umar (2005) Islam and Economic
Challenge, The Islamic Foundation and The
International Institute of Islamic Thought
18. Chapra, Umar (2008) The Islamic Vision of
Development in the Light of the Maqāsid Al-
Sharī‘ah Islamic Research and Training Institute
Islamic Development Bank, Jeddah
Broich, Josef and Bezzenberger, Broich (2009)
Germany`s Response to the Financial Crisis,
Symposium on Governmental Assistance for
Industries and Businesses, Tokyo,
Mei, Ooi, Shuat (2010) Global financial Crisis:
implications on Malaysian Economy, University
Tunku Abdul Rahman
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