Question

After reading Principles of Macroeconomics, please be able to discuss the concept of money and the banking system. Try to relate the concepts to your personal (all be it, perhaps prospective) life.

Answer 1

Principles of macroeconomics :-

1. National income
2. Inflation
3. Economic output
4. International trade

Macroeconomics deals with the rules and policies of the banking system as the above stated principles are mostly related with the starategies of the banks.

- The national income is the net output of the country and the output is related with the investment of consumer (us) . For investment we need money and the main source of money are banks.

- The inflation rates is also dependent on the policies of government and banks. As it depends on the interest rates given by the government and the banks.

- Economic output is the gross product whivh is produced by an economy of the country. We the people of country provide the aggregate output in the economy.

- International trade is also the major contributer in which there is transfer of the currency and it is done with the help of banking sector.