Macroeconomics
Macroeconomics takes a big-picture view of the entire economy, including examining the roles of, and relationships between, corporations, governments and households, and the different types of markets, such as the financial market and the labour market.
Macroeconomics(from the Greek prefix makro-meaning "large" +economics) is a branch ofeconomicsdealing with the performance, structure, behavior, and decision-making of an economy as a whole. This includes regional, national, and global economies.
While macroeconomics is a broad field of study, there are two areas of research that are emblematic of the discipline: the attempt to understand the causes and consequences of short-run fluctuations in national income (the business cycle), and the attempt to understand the determinants of long-runeconomic growth(increases in national income).Macroeconomic models and their forecasts are used by governments to assist in the development and evaluation of economic policy.
Macroeconomists study aggregated indicators such as GDP, unemployment rates,national income,price indices, and the interrelations among the different sectors of the economy to better understand how the whole economy functions. They also develop models that explain the relationship between such factors as national income,output,consumption,unemployment,inflation,saving,investment,energy,international trade, andinternational finance.
Macroeconomics and microeconomics, a pair of terms coined by Ragnar Frisch, are the two most general fields in economics. In contrast to macroeconomics, microeconomics is the branch of economics that studies the behavior of individuals and firms in making decisions and the interactions among these individuals and firms in narrowly-defined markets.
IMPORTANCE OF STUDYING MACROECONOMICS.
1. It is useful in formulation of economic policies that can be used in fast tracking the economy.
2. It helps in understanding the behaviour and performance of an economy.
3. We study macroeconomics in order to determine the income level of an country (national income) by aggregating individual income.
4. It allows the determination of employment and unemployment in a country.
5. It allows the determination of growth.
6. It also allows the study of monetary problems.
7. It helps in studying fluctuations in an economy and how to avoid or prevent those fluctuations.
The next aspect in a quest to understanding macroeconomics is the circular flow of money or income.
CIRCULAR FLOW OF INCOME.
This is an economic model used to describe the relationship (economy) that exist between different economic agents.
THE 5 SECTOR MODEL(OPEN ECONOMY)
Assumpions
-their are five sectors in the economy(hosehold,business,government,foreign qnd financial or banking sectors).
-Household sector is the owner of all factors of production i.e, land, labour, capital, and enterpreneurship.
-Business sector perform the function of production.
-household perform the function of consumpion.
-government sector perform the function of co-ordination and supervision of all the other sectors.
-foreign sector perform the fuction of importation.
-financial sector perform the function of savings.
In the five sector model, their are some variables called leakages and injection
Leakages are economic variables that result in the reduction of money in serculation. E.g, Savings,Taxation & importation.
Injections are economic variables that causes and increase of money in circulation. E.g, Investment, Government Expenditures & Exportations.
MACROECONOMIC STRUCTURE.
This can be defined as the total unit that guide the operation of an economy.
The followings are the structures or unit of an economy. These are;
1. Primary sector.
A primary sector is a sector of an economy that is concerned with the exploration of mineral resources(liquid and solid) and also production of agricultural productivity(fishing, forestry e.t.c).
2. Secondary sector
This is a sector of an economy that uses the output of primry sector as input and process it into finished goods. Example of secondary setor is the manufacturing industries.
3. Tertiary sector
This is a sector of an economy whereby services are being provided to the economy i.e, professional and unprofessional services such as, insurance services, banking services, transportation services, sporting activities, movie industries e.t.c.
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