This includes regional, national, and global economies. In contrast to macroeconomics, microeconomics is the branch of economics that studies the behavior of individuals and firms in making decisions principles of macroeconomics pdf download the interactions among these individuals and firms in narrowly-defined markets.
Macroeconomics encompasses a variety of concepts and variables, but there are three central topics for macroeconomic research. Macroeconomic theories usually relate the phenomena of output, unemployment, and inflation. Outside of macroeconomic theory, these topics are also important to all economic agents including workers, consumers, and producers. Everything that is produced and sold generates an equal amount of income.
Therefore, output and income are usually considered equivalent and the two terms are often used interchangeably. Economists are interested in long-run increases in output study economic growth. However, output does not always increase consistently. The relationship demonstrates cyclical unemployment. Economic growth leads to a lower unemployment rate. The unemployment rate in the labor force only includes workers actively looking for jobs. Unemployment can be generally broken down into several types that are related to different causes.
Classical unemployment theory suggests that unemployment occurs when wages are too high for employers to be willing to hire more workers. According to these more recent theories, unemployment results from reduced demand for the goods and services produced through labor and suggest that only in markets where profit margins are very low, and in which the market will not bear a price increase of product or service, will higher wages result in unemployment. Large amounts of structural unemployment can occur when an economy is transitioning industries and workers find their previous set of skills are no longer in demand. Structural unemployment is similar to frictional unemployment as both reflect the problem of matching workers with job vacancies, but structural unemployment also covers the time needed to acquire new skills in addition to the short term search process. While some types of unemployment may occur regardless of the condition of the economy, cyclical unemployment occurs when growth stagnates. US from 1875 to 2011. Over the long run, the two series show a close relationship.