What Are the Different Types of Macroeconomic Variables?
Although economic growth, consumer involvement, and overall financial conditions vary with each country or region, general macroeconomic variables remain constant. Specific components and factors influential in macroeconomics can be categorized into three broad topics: gross domestic product (GDP), inflation, and unemployment. Government regulations, fiscal policies, the consumer price index (CPI), access to credit, and business cycles are all common macroeconomic variables discussed by politicians and economists. Each of these influential topics fits under one of the three primary macroeconomic variables.
Gross domestic product (GDP) is the sum of of all productivity within a country for a given year. GDP includes all domestically manufactured products, all produce and livestock, all asset valuation increases, and intangible investment growth. Typically, such figures are stated as either GDP or GDP per-capita. Per-capita GDP is calculated by divided GDP by the population of a particular country.
For example, a country might have a GDP of $200 billion US Dollars (USD), with a population of 200 million people. In analyzing macroeconomic variables, an economist calculates GDP per-capita by dividing $200 billion USD by 200 million, for a result of $1,000 USD-worth of product produced per person, per year. When determining factors such as economic growth, GDP and GDP per-capita provide an aggregate view of productivity to compare with previous years, other economies, or as part of a study of global-scale macroeconomics.
Inflation is, in simplest terms, the rate at which prices increase over a period of time. Smaller components, such as the consumer price index, fiscal policies, commercial banking, and access to credit all play a role in influencing inflation up or down. Limited access to credit, for example, can restrict how much raw materials a manufacturer can buy and, therefore, limit supply. Poor supply and increased production costs lead to increased prices, especially when demand is high. Viewed in terms of macroeconomic variables, high or rapid inflation of prices can limit economic growth and over time bring down GDP from one year to the next.
Unemployment simply calculates the number of residents who are not presently employed but are actively seeking employment. Some unemployment calculations also include those individuals deemed under-employed. Under-employed individuals are those workers who have accepted part-time positions or positions for which they are grossly overqualified. High unemployment rates have obvious influence on consumer spending, but they also indicate poor job growth in both the private and public sectors.
Individual macroeconomic variables, such as banking, the consumer price index, and changes in government regulations, each influence multiple areas of economic growth. While the consumer price index, a historical tracking of prices paid for various goods by consumers, might be categorized under inflation, it also affects GDP and eventually influences unemployment. Each factor within a particular economy has a complex relationship and varying effect on other factors.
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