Question

Why is the study of Macroeconomics important as it relates to the U.S. economy?

Answer 1

Macroeconomists are researching aggregated measures such as GDP , unemployment levels, and price indices to understand how the entire economy functions and build models that describe the relationship between variables such as national income, manufacturing, consumption, unemployment, savings, investment , government spending, and foreign trade. Taken as a whole, these variables form a class of variables which are called economic indicators. Combined with each other, these metrics, which are graded as leading, lagging and coincident relative to their predictive potential, provide economists with a contextual attribution for the economy.

Everything produced by the US economy is calculated by the GDP. The economy enters a recession when the GDP growth rate turns negative. That's occurred in the past of U.S. recessions. It's called a depression, when the economy contracts for years. Know how recession and depression vary Consumer spending is the most critical component of the economy. The remaining three elements are company investment, government spending and net exports.

The U.S. government calculates the rising rate of inflation through the Consumer Price Index, although it provides inaccurate details at times. Energy, coal, and food prices are dictated by the commodity market. Within months they could spike and plunge. Alternatively, the Federal Reserve follows the main inflation rate. This excludes costs related to electricity and food. If inflation occurs in properties, such as housing or stocks, an asset bubble is called that. The reverse is deflation; it occurs on dropping rates. That is also valid for properties such as house prices and stock portfolios. That gives rise to stock crashes and economic crises. In a given economy, deflation is worse than inflation.