Issues in Macro Economics

The following highlights the six major macroeconomic issues

1. Employment and Unemployment
• Unemployment refers to the involuntary idealness of the resources
• Society's actual output will be less than potential
• Objective of government policy is to ensure full employment
• Absence of involuntary unemployment
2. Inflation
• Constantly rising prices of commodities and factors of production
• Opposite situation is deflation
• During inflation some people gain and some people loose
• Change in income distribution pattern
• Objective of the government is to ensure price stability
• Absence of inflation and deflation
3. The Trade Cycle
• Periodic fluctuations in the business and economic activities
• Tendency of output an employment
• Periods of good trade alternate with the periods of bad trade
• Boom Periods of high output and employment with period of slump
period and low output and employment
• We study the cases of business cycle and suggest remedial measures
4. Stagflation
• Co- existence of inflation and unemployment
• Most common macro economic issue today
• Every country in the world either developed or under developed is
now struggling to fight the disease of Stagflation.
5. Economic Growth
• Trend in Nations output over a log period of time
• Expansion of societies production capacity( New land for cultivation r
new factories)
Three major sources of growth
Growth of labor force
Capital formation
Technological progress
6. Exchange rate and balance of payments
• Balance of payment is the systematic record of all economic
transactions between other countries and home countries in a year.
• Rate at which a country’s currency is exchanged for other currency
• Discover the causes and consequences of such changes