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Macroeconomics encompasses a variety of concepts and variables, but above all the three central macroeconomic variables are output, unemployment, and inflation. [ 5 ] : 39 Besides, the time horizon varies for different types of macroeconomic topics, and this distinction is crucial for many research and policy debates.
A macroeconomic model is an analytical tool designed to describe the operation of the problems of economy of a country or a region. These models are usually designed to examine the comparative statics and dynamics of aggregate quantities such as the total amount of goods and services produced, total income earned, the level of employment of productive resources, and the level of prices.
Macroeconomic indicators are aggregated statistics for a geography, population, or political jurisdiction gathered by agencies and bureaus of various government statistical organization, and sometimes by private organizations using similar techniques.
The labor market is firing on all cylinders with 103 consecutive months of job additions and a record-low unemployment level.
An economic indicator is a statistic about an economic activity. Economic indicators allow analysis of economic performance and predictions of future performance. One application of economic indicators is the study of business cycles .
Yet another regularity is the co-movement between output and the other macroeconomic variables. Figures 4 – 6 illustrate such a relationship. We can measure this in more detail using correlations, as in column B of Table 1. A procyclical variable has a positive correlation since it usually increases during booms and decreases during recessions.
Aggregate supply/demand graph. The AD–AS or aggregate demand–aggregate supply model (also known as the aggregate supply–aggregate demand or AS–AD model) is a widely used macroeconomic model that explains short-run and long-run economic changes through the relationship of aggregate demand (AD) and aggregate supply (AS) in a diagram.
Austrian theorist Henry Hazlitt argued that aggregate demand is "a meaningless concept" in economic analysis. [10] Friedrich Hayek, another Austrian, wrote that Keynes' study of the aggregate relations in an economy is "fallacious", arguing that recessions are caused by micro-economic factors. [11]