Why ‘Macroeconomics’ is here when the other write ups are regarding management? Because this comes over and above Demographics. The data from macroeconomics is essentially right from start-up of an industry to marketing of new products.
When you finish school and start looking for a full time job, your experience will, to a large extent, be shaped by prevailing economic conditions. In some years, firms, throughout the economy are expanding their production of goods and services employment is
rising and jobs are easy to find. In other years, firms are cutting back production, and finding a good job takes a long time. Not surprisingly any college graduate would rather enter the labour force in a year of economic expansion than in a year of economic contraction.
Because the condition of the overall economy profoundly affects all of us, changes in economic conditions are widely reported by the media. Indeed, it is hard to pick up a newspaper without seeing some newly reported statistic about the economy. The percentage of the labour force that is out of work (unemployment), total spending at stores (retail sales), or the imbalance of trade between the US and the rest of the world (the trade deficit) are some of the aspects business is considering. All these statistics are macroeconomics.
Economics is divided into two branches: microeconomics and macroeconomics. Microeconomics is the study of how individual households and firms make decisions and how they interact with one another in markets. Macroeconomics is the study of the economic as a whole. The goal of macroeconomics is to explain the economic changes that affect many households, firms, and markets simultaneously. Macroeconomics address diverse questions:Why is the average income high in some countries while it is low in others? Why do prices rise rapidly in some periods of time while they are more stable in other periods? Why do production and employment expand in some years and contract in others? These questions are all macroeconomics in nature because they concern the workings of the entire economy.
Gross domestic product or simply GDP which measures the total income of the nation. GDP is the most closely watched economic statistic because it is thought to be the best single measure of a society’s economic well –being.
The economy’s income and expenditure.
It is not a surprise that people with higher incomes enjoy higher standards of living —better housing, better healthcare, fancier cars, more opulent vacations, and so on.
The same logic applies to a nation’s overall economy. When judging whether the economy is doing well or poorly, it is natural to look at the total income that everyone in the economy is earning. That is the task of gross domestic product (GDP).
GDP measures two things at once; the total income of everyone in the economy and the total expenditure on the economy’s output of goods and services. The reason that GDP can perform the trick of measuring both total income and total expenditure is that these two things are really the same.
An economy’s income is the same as its expenditure because every transaction has two parties: a buyer and a seller.
All the transactions between households and firms in a simple economy. It simplifies matters by assuming that all goods and services are bought by households and that household spends all of their income. In this economy, when households buy goods and services
from firms, these expenditures flow through the markets for goods and services. When the firms in turn use the money they receive from sales to pay workers’ wages, landowners’ rent, and firm owners’ profit this income flows through the markets for the factors of production. Money continuously flows from households to firms and then back to households.
GDP measures this flow of money. We can compute it for this economy in one out of two ways: by adding up the total expenditure by households or by adding up the total income (wages, rent
and profit) paid by firms. Because all expenditure in the economy ends up as someone’s income, GDP is the same regardless of how we compute it.
Households do not spend all of their income, they pay some of it to the government in taxes, and they save for use in the future. In addition, households do not buy all goods and services produced in the economy; some goods and services are bought by governments and some are bought by firms that plan to use them in the future to produce their own output. Yet regardless of whether a household, government or firms buy a good or a service the transaction has a buyer and a seller Thus, for the economy as a whole expenditure and income are always the same.