Macroeconomic variables, or MVs, are indicators of the overall state of a country's economy. In the United States, they include the Consumer Price Index, average prime rate, Dow Jones Average and inflation rate. The government studies MVs and attempts to keep them at certain levels in order for the economy to function.Know More
Macroeconomics looks at the economy from the widest perspective and studies general trends in order to assess the relative health of a given country's economy. Macroeconomics is important in governing a country, because it is the role of the central government to keep economy stable so that microeconomic activity can take place. Governments can control macroeconomics by issuing money and determining fiscal policies.
The U.S. Federal Reserve has been running Comprehensive Capital Analysis and Review (CCAR) every year since 2009. CCAR is a stress test for the U.S. banking system. The 19 largest American bank holding companies are tested to see if they can lend to the economy in case of an adverse macroeconomic scenario.
Among the macroeconomic variables that the Federal Reserve used to develop the stress scenario for the banks in 2011 were the Consumer Price Index, real GDP, real disposable personal income, 3-month Treasury bill rate, unemployment rate, National Price Index and Dow Jones Index. The next year, MVs such as mortgage rate and Market Volatility Index were added.Learn more about Economics
An agrarian economy is a type of economy that relies primarily on agricultural industry including livestock farming or crop production. It is a form of economy whose major factor of production is the agricultural land. Prosperity of agrarian economy is also influenced by other factors such adequate rainfall, suitable climate and inputs like fertilizers.Full Answer >
Deflation is bad for the economy because it causes delayed spending, nominal wage cuts, higher interest rates and a higher burden of debt ratio. Deflation is the opposite of inflation and generally causes prices to go down after a recession.Full Answer >
A diversified economy is an economy that has a number of different revenue streams and provides nations with the ability for sustainable growth because there is not a reliance on one particular type of revenue. This diversification provides nations with the security and reliability that they need so that if one economic revenue stream should fail, the nation knows that they have several other options for revenue.Full Answer >
A closed economy refers to an economic system which does not have business relations with any economies outside its own system. Closed economies employ barriers to the trade of goods and services, monies and intellectual property to and from their economic system.Full Answer >