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Advanced Macroeconomics

Advanced macroeconomics (from prefix macro meaning large and economics meaning branch of economics that deals with the presentation, structure, and the conduct of a national or regional economy as a whole. Along with microeconomic, advanced macroeconomics is one of the two most broad-spectrum fields in economics. Advanced macroeconomics is the study of the behavior and decision-making of complete economies. Advanced macroeconomics is a study of aggregated indicators such as:

  • It is the study of the gross domestic product effects.
  • It is the study of the unemployment rates.
  • It is the study of the price indexes to understand how the whole economy functions.

Advanced macroeconomics develop models that explain the relationship between the various factors such as national income, consumption, output, unemployment, inflation, savings, investment, international trade and the international finance. While advanced macroeconomics is a broad field of study, there are two areas of the study that are symbolic of the discipline:

This is the attempt to understand advanced macroeconomics cause and outcome of fluctuating circumstance. This involves the national income and the business cycle. The attempt to understand advanced macroeconomics with the determinants of long-run economic growth increases in national income).

Various microeconomics hold a different point of view and unlike advanced macroeconomics focuses on the actions of individual agents, such as corporations and consumers and their behavior regards to prices and quantities in specific markets. Governments and large independent companies use the advanced macroeconomics model and their forecasts.

The advanced macroeconomics equation (M.V = P.Q) states that the money supply times the velocity of money (how quickly cash changes hands from one person to another through a series of transactions) is equivalent to nominal output (price level times quantity of goods and services produced). Advanced macroeconomics, unlike classical economists, such as assumed that real income and the velocity of money would be static in the short-run, so, based on this advanced macroeconomics theory, a change in price level could only be brought about by a change in money supply. This is to assist in the development and assessment of advanced macroeconomics policy and business strategy.

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