Journal of Stock & Forex Trading
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Brief Note on Macroeconomics and its Goals

Chun-I Chen^{* *}Correspondence: Chun-I Chen, Department of Finance, La Trobe University, Melbourne, Australia, Email:

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Description

The area of economics known as macroeconomics is concerned with how a large-scale economy operates. It is distinct from microeconomics, which examines the decision-making processes of specific economic actors, such as corporations and consumers. The research on the overall health of the economy is referred to as macroeconomics. Macroeconomics focuses on the overall aggregate impact of microeconomics while microeconomics explores how individual people make decisions. The government to comprehend and foresee the long-term effects of its policies, macroeconomics is essential.

The term "macroeconomics" is defined as the study of an economy, typically the economy of a country. In the section on economic and social goals, we spoke about how countries have economic objectives like efficiency and equity. Three of these objectives economic growth, price stability, and full employment receive further attention in macroeconomics. Every nation has macroeconomic objectives that it hopes to accomplish; these targets are essential for achieving long-term, consistent economic success. These are the top five macroeconomic objectives that almost all central banks are working toward.

The functioning of the industry as a whole is a concern of macroeconomic policy. Macroeconomic policy's overarching objective is to create a sustainable financial environment that is conducive to successful and sustainable growth in the economy, which is essential for generating wealth, jobs, and higher living standards. Fiscal policy, monetary policy, and exchange rate policy are the three main pillars of macroeconomic policy. This short describes the characteristics of some of these policy tools and the various ways in which they might support steady and sustained growth.

Goals of macroeconomics

Maximizing the lifestyle and achieving steady economic growth are the overarching objectives of macroeconomics. The goals are backed up by other objectives including reducing unemployment, boosting productivity, and reducing inflation, among others. The macro economy of a nation is influenced bya variety of factors; hence economic indicators are crucial for evaluating a variety of performance factors.

Inflation

The rise in total price levels and ensuing decline in buying power is known as inflation. It mostly happens because there is more demand for goods and services, which leads to higher costs. Therefore, inflation is a sign of growth. A general and continual increase in the level of prices throughout an economy is referred to as inflation. A shift in relative pricing is not what inflation refers to. When the cost of tuition has increased while the cost of laptops has decreased, there has been a relative price change. On the other hand, inflation indicates that there is demand for price increases across the majority of the economy's markets.

Interest rates

The return a lender receives from a borrower is expressed as interest rates. The Federal Reserve in the United States and the Bank of Canada in Canada set them. Interest rates are a very effective tool for affecting economic activity since they have an impact on consumer decisions. When interest rates are high, borrowing is more expensive, which encourages consumers to cut back on spending. In contrast, when interest rates are low, borrowing is less expensive, which encourages customers to spend more.

Equilibrium in balance of payments

A country's exports or imports shouldn't be significantly more than its exports or imports in order for the balance of payments to be in equilibrium. Large deficits or surpluses in the balance of payments are not good for the economy.

Stability

By preventing or minimizing changes in output, employment, and prices, stability is attained. The goal of stability is to prevent business cycle's inflationary and deflationary decreases. Changes in numerous economic metrics, such as the inflation rate, unemployment rate, and output growth rate, from month to month and year to year provide evidence for this objective. In the event that these don't change, stability will soon arrive. It is advantageous to maintain stability because it prevents uncertainty and economic disturbances. It implies that long-term consumption and production plans can be securely pursued by individuals and enterprises. Price stability and the inflation rate are often the two issues that policymakers are most concerned.