Understanding Macroeconomics: Objectives, GDP, and Key Indicators
Macroeconomics: Objectives and Instruments
Macroeconomics deals with the study of the functioning of the economy as a whole. Its purpose is to obtain a simplified view of the economy, but at the same time allows us to understand and influence the level of economic activity in a particular country or set of countries.
Macroeconomic policy is made by governments to influence the course of the economy as a whole.
A. Objectives of Macroeconomics
- Growth of production
- Full employment
- Price level stability
- Reduce
International Economics: Key Concepts and Relationships
International Economics: Key Concepts
E= (e·p)/p* r€ = r$ – (forward – e)/e Interest Rate Parity: r€-r$ = (Expect €/$ – e€/$)/e€/$ = 9 in order to satisfy interest parity… 9%
US iPhone 199, Spain 699, e=1.38$/€. 699·1.38=x, x/199=4. No arbitrage, E is not equal to 1.
An expansionary policy of China increases r*. In Spain, it reduces investment, increasing net capital outflow and the supply of € in the foreign exchange market, causing E to fall and NX to rise. Decrease supply of
Read MoreGlobal Food System: Bretton Woods, Corporate Influence, and Land Grabs
Understanding the Global Food System
Bretton Woods Institutions and Their Significance
The three Bretton Woods Institutions (BWI) are the World Trade Organization (WTO), the International Monetary Fund (IMF), and the World Bank (WB). These institutions are significant because they helped reduce trade barriers through exchange rate stability. The IMF and WB implemented Structural Adjustment Programs (SAPs), which facilitated neoliberal globalization throughout the global south. Although free trade
Read MoreUnderstanding Inflation, Fiscal Policy, and Government Budgets
Understanding Inflation
Inflation: is a general increase in prices.
CPI: [(Current year CPI – Previous year CPI) / Previous year CPI] * 100
Core CPI: CPI less the evolution of unprocessed foods and energy products.
GDP Deflator: [(Current year deflator – Previous year deflator) / Previous year deflator] * 100 or (Nominal GDP / Real GDP)
Causes of Inflation
Inflation occurs due to:
Increased Demand
- Monetarist View: Inflation occurs when the money supply increases beyond production increases.
- Keynesian View:
Understanding Michael Porter’s Competitive Advantage Theory
Michael Eugene Porter: A Brief Biography
Michael Eugene Porter (born 1947) is an American economist, professor at Harvard Business School, specializing in management and business administration, and director of the Institute for Strategy and Competitiveness.
Porter earned a Bachelor of Arts in Mechanical and Aerospace Engineering from Princeton University (1969), an MBA from Harvard University (1971), and a Ph.D. in Business Economics from Harvard University (1973).
Strategic Management Theory
His main
Read MoreNatural Resources, Capital, and Financial Markets
Market for Natural Resources
In the market for natural resources, the reward (income) in the short term is determined by the assumption that the amount of natural resources in an ecosystem is constant. The price equilibrium depends solely on demand (DDA). This implies that resources are not depleted overnight. Income from human resources is determined not by the price of the resource itself, but by the price derived from using it (i.e., the value of its yield). Therefore, natural resources are assigned
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