Macroeconomics: Aggregate Output & Income

Microeconomics studies the economic activity and behavior of individual economic units such as households, companies, and markets.

Microeconomics analysis examines a company’s output and income, the productivity of the labor force, the price level of its goods and services, and the actions of its management.

Macroeconomics focuses on national aggregates

Such as total investment, the amount of spending by all businesses on plant equipment; total consumption, the amount spent by all households and goods and services; the rate of change in the general level of prices; and the overall interest.

Macroeconomics evaluates a nation’s aggregate output and income in competitive and comparative advantages, the productivity of its labor force, its price level, inflation rate, and actions of its national government and the central bank.

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The objective of macroeconomic analysis is to address such fundamental questions as the following:

• What is an economy’s aggregated output?
• How is aggregated income measured?
• What factors determine the level of aggregated output/income for an economy?
• What are the levels of aggregated supply & demand of goods and services within a country?
• Is the level of output increasing or decreasing, and at what rate?
• Is the general price level stable, rising, or failing?
• Is unemployment rising or falling?
• Are households spending or saving more?
• Are workers able to produce more output for a given level of input?
• Are businesses investing in and expanding their productive capacity?
• Are exports/imports rising or falling?

From an investment perspective, investors must be able to evaluate a country’s current economic environment and forecast its future economic environment in order to identify asset classes and…