Macroeconomic goals act as a blueprint for a nation's economic health, impacting everything from income potential to investment stability. Let's delve into the five main macroeconomic goals that governments and central banks strive to achieve and
Macroeconomics
Behavioral Economics: Importance, Examples of Concepts
What's it: Behavioral economics is a branch of economics on how psychological factors influence and explain economic decision making. It studies the cognitive, emotional, cultural, and social effects on decisions made by economic
Total Factor Productivity (TFP): Growth Engine Beyond Labor and Capital – Determinants
What's it: Total factor productivity quantifies the share of economic growth not explained by increases in labor and capital when both are used together in the production process. We also often refer to it as the residual Solow model or multifactor
Foreign Exchange Reserves: A Nation’s Economic Shield for Economic Stability
What's it: Foreign exchange reserves are liquid assets denominated in foreign currency held by the central bank or government for future use. This includes reserves in hard currency (such as dollars, euros, and yen), government securities
Capital Account: Beyond Current & Financial in the Balance of Payments (Components)
The capital account acts as a companion to the current account and financial account within a country's balance of payments (BoP). It meticulously tracks the flow of capital—not money used to buy goods and services but rather transactions involving
Kondratieff Cycle: Long Waves of Innovation and Economic Growth
The Kondratieff cycle, also known as the long wave theory, proposes a fascinating concept: the existence of long economic upswings and downswings lasting for decades. This theory, named after Russian economist Nikolai Kondratieff, suggests that these
Automatic Stabilizers: Built-in Buffers for the Economy + Tools
What's it: Automatic stabilizers are countercyclical fiscal tools. They moderate economic fluctuations without direct government intervention. At one time, when the economy was contracting, they helped the economy to avoid further deterioration,
Understanding Gross Investment vs. Net Investment
Gross investment encompasses the money businesses spend on both expanding their capabilities and simply keeping existing equipment running smoothly. This includes buying new factories, machinery, and other physical assets to increase output, but also
Gross Private Domestic Investment: Understanding Its Components and Impacts
Gross Private Domestic Investment (GPDI) represents private sector investment spending. It is one component of aggregate demand, along with household consumption, government spending, and net exports.Investment growth contributes to increasing
Price Stability: Cornerstone of a Healthy Economy
Price stability is the dream scenario for a healthy economy. Imagine a world where you can plan your finances with confidence, knowing the price of groceries or that new gadget won't drastically fluctuate overnight. This economic sweet spot, where
Understanding Consumption Expenditure: Types and Examples
Consumption expenditure refers to the money individuals spend on goods and services. In economics, we can also say it is the residual disposable income after saving. Economists assume individuals allocate their income for two purposes: consumption