Video:What Is Macroeconomics?with Nick Jaynes
Want to learn about macroeconomics and what falls under that category? Here, see helpful information about macroeconomics.See Transcript
Transcript:What Is Macroeconomics?
Hi I'm Nick Jaynes for About.com and this is a brief overview of macroeconomics.
Information About Macroeconomics
Macroeconomics is the study of the economy as a whole. It focuses on economy-wide changes such as unemployment, national income, economic growth rate, gross domestic product, price levels, and inflation. Governments and corporations use macroeconomic models to help in development of economic policy and strategy. There are some key terms in macroeconomics that need to be explained in order to best understand macroeconomics.
Terms From Macroeconomics
First: gross domestic product.The gross domestic product or GDP is the total market value of all final products produced by a country. This number is often used as an indicator to assess a country's standard of living. The gross domestic product is not the same as the gross national product. The gross national product or GNP is the value of all products produced by labor and property of the residents of a country.
More Information About Macroeconomics
To simplify, the GDP measures the total output of products within a country's boarders while GNP measures the output generated by a country's enterprises and has no geographic boarders. For instance, cars produced in Mexico for an American automaker count towards the United States' GNP but does not factor into the GDP as the cars were not built within the US itself. Another important concept to understand is unemployment. Several different numbers determine unemployment figures.
The first, of course, are those who are seeking employment but cannot find any work. But there are some important unemployment factors that are commonly left out of unemployment percentages and figures. The two most important are the under employed and discouraged workers. The under employed are those who are working part time but wish to be working full time. Discouraged workers are those who are unemployed and have given up on searching for a job altogether.
Lastly, inflation. Inflation is the rise of price levels of goods and services within the economy over a given time frame. As the cost of goods rise, the value of currency drops. Inflation can be seen simultaneously as positive and negative. As inflation rises, and the real value of money drops, investment can be discouraged. But on the positive side, inflation is tied to economic growth. So as a country produces more and becomes more prosperous, their economy inflates.
As you can tell, macroeconomics is a wide, and diverse field of study. And if you'd like to learn more, please visit us on the web at About.com. Thanks for watching.