Introduction of macro environment, presentation
- 1. Economics All economic questions and problems arise because human wants exceed the resources available to satisfy them. Scarcity: The condition that arises because the available resources are insufficient to satisfy wants. Faced with scarcity, we must make choices—we must choose among the available alternatives.
- 2. Economics Economics: The social science that studies the choices that we make as we cope with scarcity and the incentives that influence and reconcile our choices. The subject has two broad divisions— microeconomics and macroeconomics
- 3. Economics Microeconomics is the branch of economics that examines the behavior of individual decision-making units—that is, business firms and households.
- 4. Economics Macroeconomics is the branch of economics that examines the behavior of economic aggregates— income, output, employment, and so on—on a national scale.
- 5. The role and importance of Macroeconomics It is the study of the behavior of large collection of economic agents It focuses on 1. the aggregate behavior of consumers & firms 2. how the govt. conduct its operations & duties 3. the overall level of economic activity 4. the economic interaction among nations 5. the effects of fiscal and monetary policies
- 6. Some central questions of Macroeconomics ⚫ How can a nation increase its rate of economic growth? ⚫ What causes short-run fluctuations in the economy? ⚫ What influences the values various economic indicators and how do those indicators affect economic performance? ⚫ Why do output and employment sometimes fall, and how can unemployment be reduced? ⚫ What are the sources of price inflation, and how can it be kept under control?
- 7. Some central questions of Macroeconomics ⚫ Why are some countries exceedingly rich while others exceedingly poor? ⚫ Can govt. policies help in improving a nation’s economic performance? ⚫ How does being part of global economic system affect nation’s economies
- 8. Macroeconomists develop models that explain the relationship between factors ⚫National Income ⚫Output ⚫Consumption ⚫Unemployment ⚫Inflation ⚫Savings ⚫Investment ⚫International trade
- 9. Core objectives of macroeconomic policy ⚫ High level of output ⚫ Full employment ⚫ Price stability ⚫ Sustainable balance of payments ⚫ Rapid economic growth
- 10. Macroeconomic policy ⚫ Fiscal Policy ⚫ Monetary policy ⚫ Exchange rate policy ⚫ International trade policy/ Exim policy ⚫ Employment policy ⚫ Industrial policy