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Macro Economics - Essay Example

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The macroeconomic variables play a vital part in determining the economic situation prevailing in a nation and because of the importance that could be associated with them, this topic has been taken up as the subject of this paper. The paper analyses the behavior of variables…
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Macro Economics
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Download file to see previous pages owth structures of the variables could be assumed to be concluding that the economy in the period of study is displaying a stable situation in spite of the regular periods of booms and recessions that are a part of the regular business cycle which every economy has to pass through. Apart from that, if the long run pattern has to be considered, it is found that the economy exhibits a stable condition.
The pattern of movement of the macroeconomic variables in an economy are the ones that exhibit the way that the economy is moving at present, i.e., the present situation of the economy. The patterns of behavior that they exhibit are very important to take decision about the future plans and policies that the economy should be subjected to. For example, if an economy is going through a high inflationary phase then, the appropriate monetary policy should be to reduce the flow of money in the economy and thus check the amount of liquidity in the country. However, before doing so, it is also necessary for the decision makers to find out the exact root of the disturbance, i.e., if the excess money supply in the economy and not a low rate of interest is the cause behind the rising inflation. Thus the importance of checking the behavior of the macroeconomic variables is of key importance for the nationals and particularly the decision makers of a nation. In this paper, attempt has been made to study the pattern of behavior of a number of relevant macroeconomic variables, viz., the inflation rate, the gross investment, the inventory investment, the nominal rate of exchange between Australian and US dollars, the real exchange rate, the real rate of interest, the private household consumption, the unemployment rate, productivity of labour, the supply of money in the economy and the current account balance. The movements of all these variables taken together indicate how stable the economic situation is and how stable it is going to be over the future years and thus provide a ...Download file to see next pagesRead More
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