By: Laura Adams
Macroeconomics is a branch of economics that looks at aggregate or total economic variables to study the behavior of a national economy as a whole.
This is in contrast to Microeconomics which looks at production and prices within specific markets.
When Macro-economists study an economy, they look at 3 major variables. These are output, the unemployment rate, and the inflation rate.
1. Output is the level of production in an economy as a whole. The measure of aggregate output in the U.S. is known as the Gross Domestic Product, or GDP. It can be thought of from 2 different perspectives, production and income.
From the production side: GDP is the value of the final goods and services produced in an economy during a given period. GDP is also the "value-added" that all the businesses added to the economy during a given period.
From the income side: GDP is the sum of incomes in the economy during a given period. This is the income or revenue that a business (a) is left with as profit, (b) pays to the government as taxes, and (c) pays to employees as wages.
2. The unemployment rate is the proportion of workers in an economy who are not employed but are seeking work. The total labor force is a combination of people who are working plus those who are not working but want to work.
In the U.S., the Bureau of Labor Statistics conducts the Current Population Survey or CPS. It interviews about 50,000 households each month to determine if the adults are employed.
The survey classifies an individual as employed if they have a job at the time of the interview and as unemployed if they don't have a job but have been actively seeking a job within the prior 4 weeks.
If someone isn't working and doesn't want to work, they are not counted as part of the labor force.
So the unemployment rate is the number of unemployed people seeking work divided by the total labor force. The lower the unemployment rate, the more people are working, and this results in higher economic output.
3. Inflation is a sustained rise in the general level of prices. The inflation rate is the rate at which the average price of goods in an economy increases over time.
And deflation is the rare opposite, a sustained decline in price levels. Deflation is also called negative inflation.
Here are some more economic scenarios: hyperinflation is extreme inflation and stagflation is when inflation gets combined with economic stagnation.
Macro-economists measure the cost of living by the consumer price index, or CPI. The CPI has been used since 1917 and is published monthly. It gives the cost in dollars of a specific list of goods and services over time.
U.S. Bureau of Labor Statistics employees actually visit over 22,000 locations in 85 cities to see what's happening to the prices of products on the CPI list such as cars, gas, clothing, food, etc.
As an index, the CPI is set equal to 1 in the base period chosen. This is so its level has no particular significance. The current base period are the years 1982 to 1984, thus the average for the period 1982 to 1984 is equal to one.
In the year 2000, for example, the U.S. CPI was 1.71. This means that when comparing prices for similar products, they were 71% higher in 2000 than they were in the time period 1982-1984.
When demand rises, this is called a Boom and it leads to inflation. Follow this:
When consumer demand increases, the goal of production is, of course, to keep up with that consumer demand. This entails paying workers overtime or hiring additional workers to beef up output. All this extra work means that labor costs rise because more people are being paid to do the work. These increased labor costs are passed on to the consumer in the form of higher prices. And higher prices, as we've said, are the definition of inflation.
When demand falls, this is called a Recession and it leads to deflation. Follow this:
When consumer demand falls, workers get laid off or have their working hours cut back. If production needs decrease, fewer workers are obviously needed to fill the decreases in demand. The decreased labor costs are passed on to the consumer in the form of lower prices. Companies must reduce their prices to stay competitive in a shrinking marketplace. And lower prices are the definition of deflation.
Recession is a period of negative GDP growth. The time frame for a recession is debated. Many macro-economists insist that negative growth must last for at least 2 consecutive quarters.
Others define recession more loosely, as a significant decline in growth that lasts more than a few months. A sustained recession is called an economic depression.
"A creative economy is the fuel of magnificence." -Ralph Waldo Emerson (1803-1882)
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Monday, December 10, 2007
Tuesday, November 27, 2007
The Secret to Becoming Rich
Author: Elise Fisher Napoleon Hill, the author of Think and Grow Rich, believes that a person does not have to be a genius to become rich. Any person can become wealthy if he thinks positively and has a deep desire to achieve his goal. Positive Thinking: You must see your financial dreams and know that you will be able to attain them. You must already own them. If you begin making up every rationalization under the sun why you can't succeed, pinch yourself. You have to discipline your body and mind to think positive thoughts. Teach yourself that those kind of thought patterns are unacceptable. You can obtain greatness, even if you are not the smartest, most talented, or best looking person in the world. Success is your if you'll just allow it to come into your life. Don't underestimate the power of your thoughts. Burning Desire: Hill tells a true tale of a man named Edwin Barnes who desired to become Thomas Edison's partner. Most of us would have scoffed at him had we lived back then. Edwin Barnes was a nobody. Nevertheless, he had a deep desire, a life dream, and he was determined. He went to Thomas Edison and convinced him to hire him. He did not instantly achieve his dream, but he worked hard and ultimately became Thomas Edison's partner. This was a feat everyone thought was impossible. Edwin Barnes followed these 7 steps to gain this great success: 1. Choose a definite dream. 2. Put all your energy into that dream. 3. Be willing to do menial work at first. 4. Visualize your dream. 5. Form a strategy. 6. Endure through the hard times. 7. Eliminate any way to retreat. As you focus on obtaining your goals, answer these questions: What is the exact amount of money I want? What am I willing to sacrifice for it? What exact date do I want this money by? What is my strategy? Don't forget, to successful people, there is no such thing as "defeat." What looks like defeat is no more than a great opportunity. Start creating opportunities out of failures and being successful today! This article was found on http://www.articlecity.com/.
Monday, September 24, 2007
All About Inflation
This is an increase in the price of a basket of goods and services that is representative of the economy as a whole. Another definition of inflation is that it is an upward movement in the average level of prices. Its opposite is deflation, a similar movement in the opposite direction. The boundary between inflation and deflation is price stability. Because inflation is a rise in the level of prices, it is intrinsically linked to money, which may explain the frequently quoted, “Inflation is too many rupees chasing too few goods.
What is WPI?
The wholesale price index (WPI) is the most widely used price index in India. It is the only general index aimed at capturing week-to-week price behavior of commodities flowing into the wholesale trade. WPI tracks price movements in 435 items, and it attaches a value of 22.02 % for primary articles, 14.23 % for fuel, power, light and lubricants, and a dominant 63.75 % for manufactured products. The index is generally taken as the indicator of the rate of inflation in the economy. The government and the RBI formulate their fiscal and monetary policies on that basis.
What is CPI?
Unlike in many other countries, India does not have a single consumer price index (CPI), which can then be used to measure inflation (more accurately, many say, than the WPI). What we have are four indices that measure the price behavior of commodities as relevant to four specific segments of population. Of the four, the CPI for industrial workers (CPI-IW) is the most used indicator to determine the price situation facing common people. This is also used to determine the dearness allowance of employees in both public and private sectors.
As their names suggest, the CPI pertains to a set of items that a consumer consumes while the WPI is a basket particular to the wholesale market. Therefore, if the inflation for a particular week is, say, 10 per cent, it means the index is 10 per cent higher than it was the same week the previous year. Then there is core-inflation, which means the inflation rate without taking into account food and fuel. Some say both need to be taken out because of their volatility, while some argue that both items cannot be taken out because a consumer does pay for the rise in their prices.
The index always has a base year. If a particular item has a higher weight and its price rises, it will have a greater effect on the inflation rate. At the end of the day it depends on how much weight a particular item is assigned. Most countries use a consumer price index (CPI) while India has a wholesale price index (WPI).
Inflation is always caused because of too much money in the system. In other words, inflation in a country is always caused because the supply of money is much greater than the demand for it.
Did you like this article? Visit http://www.minterest.com/ for more information!
Article Source: http://EzineArticles.com/?expert=Mahesh_Mohan
What is WPI?
The wholesale price index (WPI) is the most widely used price index in India. It is the only general index aimed at capturing week-to-week price behavior of commodities flowing into the wholesale trade. WPI tracks price movements in 435 items, and it attaches a value of 22.02 % for primary articles, 14.23 % for fuel, power, light and lubricants, and a dominant 63.75 % for manufactured products. The index is generally taken as the indicator of the rate of inflation in the economy. The government and the RBI formulate their fiscal and monetary policies on that basis.
What is CPI?
Unlike in many other countries, India does not have a single consumer price index (CPI), which can then be used to measure inflation (more accurately, many say, than the WPI). What we have are four indices that measure the price behavior of commodities as relevant to four specific segments of population. Of the four, the CPI for industrial workers (CPI-IW) is the most used indicator to determine the price situation facing common people. This is also used to determine the dearness allowance of employees in both public and private sectors.
As their names suggest, the CPI pertains to a set of items that a consumer consumes while the WPI is a basket particular to the wholesale market. Therefore, if the inflation for a particular week is, say, 10 per cent, it means the index is 10 per cent higher than it was the same week the previous year. Then there is core-inflation, which means the inflation rate without taking into account food and fuel. Some say both need to be taken out because of their volatility, while some argue that both items cannot be taken out because a consumer does pay for the rise in their prices.
The index always has a base year. If a particular item has a higher weight and its price rises, it will have a greater effect on the inflation rate. At the end of the day it depends on how much weight a particular item is assigned. Most countries use a consumer price index (CPI) while India has a wholesale price index (WPI).
Inflation is always caused because of too much money in the system. In other words, inflation in a country is always caused because the supply of money is much greater than the demand for it.
Did you like this article? Visit http://www.minterest.com/ for more information!
Article Source: http://EzineArticles.com/?expert=Mahesh_Mohan
Those Struggling With Debt 'Should Consult Professionals'
Moves to improve financial education and help more low-income consumers access competitively-priced loans and other forms of borrowing have been welcomed by one industry body.
According to R3 - the Association of Business Recovery Professionals, the trade body representing insolvency practitioners, the recently announced government scheme could help borrowers avoid unscrupulous loan sharks who charge borrowers high rates of interest. As a result of being guided away from such providers it is possible that consumers could adopt a more responsible attitude towards handling their money and be able to successfully search for a low-cost loan.
Nick O’Reilly, vice-president for R3, claimed that those Britons who are struggling to handle various demands on their spending such as mortgages, utility bills and secured loans, should avoid loan sharks and instead seek advice on their debts from reputable professionals.
He said: “Loan sharks take advantage of those who are at their most vulnerable. In most cases, when an individual approaches a loan shark, they see it as their only way out of trouble, but unfortunately dealing with loan sharks can only lead to more problems. The advice from the professionals is to consult an expert as soon as you see problems arising. They can advise on the best course of action, without resorting to illegal loans sharks.”
In addition, the association pointed to statistics from its most recent debt index, carried out in August, which showed that only just over a third (38 per cent) of people who claim that their finances are causing them “great difficulties” have looked to get professional advice. Meanwhile, 12 per cent of those concerned about their money management have gone on to borrow cash again via loans, which in “many cases” has seen them resort to loan sharks.
Findings from the R3 index also indicated that one in five see their debts as currently being “out of control”. As a result, 19 per cent of those struggling to handle their finances have taken out a debt consolidation loan, with 28 per cent selling items as a means of raising extra cash. People on lower incomes are revealed to have higher proportions of debt as those earning 21,540 pounds are some 8,831 pounds in the red via non-mortgage borrowing. This compares to the 8,995 pounds of arrears consumers on an annual salary of 37,480 pounds are on.
Overall, the West Midlands has the highest proportion of overall debt, in comparison to Scotland which has the least. Women are also suggested to be the most astute in handling their money as despite earning less than their male counterparts they have lower levels of both mortgage and non-mortgage debt.
Earlier this month, the Association of British Credit Unions revealed it is set to discuss the country’s money management difficulties being held at all three of the major political party conferences. The meetings are to discuss how to help financially-excluded members of society access competitively-priced lending options such as low-rate loans. In addition, the gatherings are to discuss the provision of borrowing, for instance of adverse credit loans, for the rising numbers who find themselves with a damaged financial history.
Mark Dawson writes for the Loan Arrangers. Where visitors can compare cheap loans online, and apply for debt consolidation loans. To read more articles from Mark go to http://news.loan-arrangers.co.uk
Article Source: http://EzineArticles.com/?expert=Mark_Dawson
According to R3 - the Association of Business Recovery Professionals, the trade body representing insolvency practitioners, the recently announced government scheme could help borrowers avoid unscrupulous loan sharks who charge borrowers high rates of interest. As a result of being guided away from such providers it is possible that consumers could adopt a more responsible attitude towards handling their money and be able to successfully search for a low-cost loan.
Nick O’Reilly, vice-president for R3, claimed that those Britons who are struggling to handle various demands on their spending such as mortgages, utility bills and secured loans, should avoid loan sharks and instead seek advice on their debts from reputable professionals.
He said: “Loan sharks take advantage of those who are at their most vulnerable. In most cases, when an individual approaches a loan shark, they see it as their only way out of trouble, but unfortunately dealing with loan sharks can only lead to more problems. The advice from the professionals is to consult an expert as soon as you see problems arising. They can advise on the best course of action, without resorting to illegal loans sharks.”
In addition, the association pointed to statistics from its most recent debt index, carried out in August, which showed that only just over a third (38 per cent) of people who claim that their finances are causing them “great difficulties” have looked to get professional advice. Meanwhile, 12 per cent of those concerned about their money management have gone on to borrow cash again via loans, which in “many cases” has seen them resort to loan sharks.
Findings from the R3 index also indicated that one in five see their debts as currently being “out of control”. As a result, 19 per cent of those struggling to handle their finances have taken out a debt consolidation loan, with 28 per cent selling items as a means of raising extra cash. People on lower incomes are revealed to have higher proportions of debt as those earning 21,540 pounds are some 8,831 pounds in the red via non-mortgage borrowing. This compares to the 8,995 pounds of arrears consumers on an annual salary of 37,480 pounds are on.
Overall, the West Midlands has the highest proportion of overall debt, in comparison to Scotland which has the least. Women are also suggested to be the most astute in handling their money as despite earning less than their male counterparts they have lower levels of both mortgage and non-mortgage debt.
Earlier this month, the Association of British Credit Unions revealed it is set to discuss the country’s money management difficulties being held at all three of the major political party conferences. The meetings are to discuss how to help financially-excluded members of society access competitively-priced lending options such as low-rate loans. In addition, the gatherings are to discuss the provision of borrowing, for instance of adverse credit loans, for the rising numbers who find themselves with a damaged financial history.
Mark Dawson writes for the Loan Arrangers. Where visitors can compare cheap loans online, and apply for debt consolidation loans. To read more articles from Mark go to http://news.loan-arrangers.co.uk
Article Source: http://EzineArticles.com/?expert=Mark_Dawson
Monday, August 27, 2007
Applying For A Free Merchant Account (An Overview)
If you want to accept credit cards but you can't get a merchant account, then a free merchant account is for you. What do you need to know about free merchant accounts? Here are the basics. First off, a merchant account is an account with a bank that allows you to accept credit card payments. This means you can tell your customers to pay either in cash or use that little plastic card in their wallets.
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Tuesday, August 7, 2007
Quickly Improve Your Credit History
The purpose of this article is to help you understand some of the ways to improve your credit history quickly once you find out that you have a bad credit rating.
How Does A Home Equity Line Of Credit Work
Get the ins and outs on an home equity line of credit. Find out how it works and what to consider when shopping for a good interest rate on the line of credit.
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