Macroeconomics Essay Example | Topics and Well Written Essays - 2500 words - 3

Macroeconomics - Essay Example The outcome of these models is a comprehensive understanding of the business cycles and the economic growth in the long run and the short run respectively. These results in turn help the government and the central bank of the economy to determine the policies that would be ideal for an economy in a particular scenario. The government of a country and the central bank act as the major policy making bodies in an economy and thus their roles in the molding of the economic system of a country are quite significant. This essay analyses some of the popular macroeconomic models that have been widely discussed over a long period of time. The analyses have been supported by the relevant figures, graphs and mathematical representations. However, before discussing the macroeconomic models it is essential to enumerate the basic concepts that would come up in any macroeconomic discussion. The most important macroeconomic variable is the national income of a country. It is the value added of the total goods and services produced in the specific duration of time. The total output translates to the income and therefore the national income is identified with the Gross Domestic Product of the economy (Arnold 113). The progress of an economy depends on the growth rate of this GDP. But there may not be a consistent level of growth in an economy. The variation in the growth rates are caused by the changes in the business cycles. The fall in the national product during any such cycle can be termed as recession. The other important variables include the rate of unemployment. This is the number of people in the economy who have the potential to get employed but have remained unemployed. On the other hand the increase in the price level of the economy is termed as inflation (Rossi 121). The monetary policy of an economy is a measure to control this