Macroeconomics is a branch of economics that at the aggregate or total economic variables seeks to investigate the behavior of an economy as a whole.

This is in contrast to microeconomics, which looks at production and prices in certain markets.

With macro-economists study an economy, they look at three key variables. These will be issued, the unemployment rate and the inflation rate.

1st Output is the level of production in an economy as a whole. The measure of output in the U.S., the gross domestic product, GDP, or unknown. It is different from two perspectives, production and income must be considered.

From the production side: GDP is the value of end products and services in an economy in a given period produced. GDP is also the “added value” that all companies, the economy has, for a given period.

From the revenue side: The GDP is the sum of incomes in the economy during a given period. This is the income or revenue of a company that (a) is a gain, (b) pays to the state as taxes left, and (c) the employee pays a wage.

2nd The unemployment rate is the proportion of workers in an economy that are inactive are looking for, but work. The total labor force is a combination of people, plus those not working want to work but work.

In the United States leads the Bureau of Labor Statistics, the Current Population Survey or CPS. It interviews about 50,000 households a month to see if the adults are used.

The study classifies an individual as employed if they have a job at the time of the interview and classified as unemployed if they do not have a job but actively seeking work in the weeks before the fourth

If someone is not working and do not want to work, they are not counted as part of the workforce.

So the unemployment rate is the number of unemployed people looking for work after the total labor force divided. The lower the unemployment rate, the more people work, and this leads to higher economic performance.

3rd Inflation is a sustained increase in the general price level. The inflation rate is the rate increases with the average price of goods in an economy over time.

And deflation is a rare contrary, a sustained reduction in the price level. Deflation is also used as negative inflation.

Here are some additional economic scenarios: extreme hyperinflation is inflation and stagflation is when inflation is combined with economic stagnation.

Macro-economists to measure the cost of living of the consumer price index or CPI. The CPI has been used and will be published monthly since 1917. He gives the cost in dollars to a specific list of goods and services over time.

U.S. Bureau of Labor Statistics staff to actually visit more than 22,000 locations in 85 cities to see what the prices of the products is done on the CPI list, such as cars, gasoline, clothing, food, etc.
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As an index, the CPI is set equal to one chosen in the base period. This is as its level has no particular meaning. The current period are the years 1982-1984, or an average for the period 1982-1984 equal to one.

In 2000, for example, the first US-CPI 71st This means that, comparisons of prices for similar products, they were 71% higher in 2000 than in the period 1982-1984.

If demand increases, this is called a boom, and it leads to inflation. Follow this:

If the demand of consumers is the goal of production, of course, keep that consumer demand. This means pay employees overtime or hiring additional staff to beef output. All this extra work means that labor costs because more people will be paid, get to do the job. These increased wage costs on to consumers in the form of higher prices are passed on. And at higher prices, as we said before, the definition of inflation.

If demand drops, we speak of a recession, and it leads to deflation. Follow this:

If consumer demand falls to rise, or placed workers have reduced their working hours. If you want to reduce production, fewer workers obviously need to fill to the declines in demand. The reduced labor costs on to consumers in the form of lower prices are passed on. The companies must lower their prices to stay competitive in a declining market. And lower prices are the definition of deflation.

Recession is a period of negative GDP growth. The time frame for a recession is controversial. Many macro-economists stress that it takes a negative growth must be at least two consecutive quarters.

Others define a recession more loosely, as a significant decline in growth that more than a few months. A prolonged economic recession will be a depression.

“A creative economy is the fuel of magnificence.” Ralph Waldo Emerson (1803-1882)