What Are The Three Major Concerns In Macroeconomics

Macroeconomics is the study of economics on a national scale. It looks at the totals in an economy as a whole, not individually, as in microeconomics. The three major concerns in macroeconomics are total growth output, unemployment level and inflation. Economy is measured by using either the expenditure approach, the production approach or the income approach. Gross Domestic Product (GDP) is the final value of all goods and services produced within a country’s domestic borders during a given period. All countries use the same measurement for GDP so it is easy to compare one country’s economy to another. GDP is frequently used as a benchmark of the economic health of a country. One measure of GDP is the expenditure method, it is the most commonly used process. This method “totals consumption, investment, government spending and net exports.” (Investopedia.com) This “says that everything that the private sector, including consumers and private firms, and government spend within the borders of a particular country

These include the sale of good produced outside of domestic borders, used goods, illegal sales (such as the black market), transfer payments by government (social security and veterans disability) and intermediate goods used to make other goods like a new car tire purchased from one company to put on a new car for sale from a different company. The “unemployment rate is directly related to the economy’s aggregate output.” (Case, pg.93) The unemployment rate is a main indicator of any economy’s health. When people have work, they can spend, which can boost the economy. When many people are out of work, production is down as well as consumption. Consumption is also lowered by inflation. Inflation lowers buying power for consumers and investors. “When the overall price level of the economy rises, consumers have to spend more in order to purchase the same amount of goods.”