PRINCIPLE OF MACROECONOMICS
PRINCIPLE OF MACROECONOMICS
1.0 Content
No.
Topic
Page
1.0
Content
2
2.0
Introduction
3
3.0
Discuss the cost of inflation and the dangers of deflation.
4
4.0
Discuss the nature and the roles of money.
8
5.0
Explain how banks can add to the money supply by making loans of money they are not required to hold in reserve.
10
6.0
How hyperinflations are caused by governments resorting to seignorage.
13
7.0
Conclusion
16
8.0
Reference
17
9.0
Coursework
18
2.0 Introduction
Macroeconomics is the field of economics that studies the behavior of the aggregate economy. Macroeconomics examines economy-wide phenomena such as changes in unemployment, national income, rate of growth, gross domestic product, inflation and price levels. Macroeconomics is focused on the movement and trends in the economy as a whole, while in microeconomics the focus is placed on factors that affect the decisions made by firms and individuals. The factors that are studied by macro and micro will often influence each other, such as the current level of unemployment in the economy as a whole will affect the supply of workers which an oil company can hire from.
3.0
Discuss the cost of inflation and the dangers of deflation
In economics, inflation is a persistent increase in the general price level of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy. A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index over time.
Inflation's effects on an economy are various and can be simultaneously positive and negative. Negative effects of inflation include an increase in the opportunity cost of holding money,
1.0 Content
No.
Topic
Page
1.0
Content
2
2.0
Introduction
3
3.0
Discuss the cost of inflation and the dangers of deflation.
4
4.0
Discuss the nature and the roles of money.
8
5.0
Explain how banks can add to the money supply by making loans of money they are not required to hold in reserve.
10
6.0
How hyperinflations are caused by governments resorting to seignorage.
13
7.0
Conclusion
16
8.0
Reference
17
9.0
Coursework
18
2.0 Introduction
Macroeconomics is the field of economics that studies the behavior of the aggregate economy. Macroeconomics examines economy-wide phenomena such as changes in unemployment, national income, rate of growth, gross domestic product, inflation and price levels. Macroeconomics is focused on the movement and trends in the economy as a whole, while in microeconomics the focus is placed on factors that affect the decisions made by firms and individuals. The factors that are studied by macro and micro will often influence each other, such as the current level of unemployment in the economy as a whole will affect the supply of workers which an oil company can hire from.
3.0
Discuss the cost of inflation and the dangers of deflation
In economics, inflation is a persistent increase in the general price level of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy. A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index over time.
Inflation's effects on an economy are various and can be simultaneously positive and negative. Negative effects of inflation include an increase in the opportunity cost of holding money,