Macroeconomic variables

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It is essential to know the different macroeconomic variables, to understand what they are for and how they influence us as citizens.

For this reason, below We are going to tell you everything related to macroeconomic variables and economic.

Macroeconomic variables, what are they for?

The purpose of macroeconomic variables, focus on discovering what type of economic activity is in a country and also as a basis to believe that it will evolve over the months in that same place. To carry out these statistics, what is done is pay attention to certain indicators through which we will know the economic situation of the country, what is their level of global competence and where is the country headed.

After carrying out this study you will be able to know which companies have the best results within the country and also, make known which companies are best located within that country.

What can macroeconomic studies be used for?

Macroeconomic variables studies can be used to buy one or more companies within a country.

Macroeconomics is essential Because it is the one through the criteria and political recommendations, both fiscal and monetary.

Through macroeconomic variables it is possible to know the stabilization of the cost of things within a country on the free market. It is understood that the country is stable when prices do not rise or fall at any time.

Through macroeconomics, an attempt is made to have a complete level of work for the entire population of a country. Macroeconomics focuses on studying all the norms that are linked in a country. with the other countries of the world.

The political environment and macroeconomic variants

The analyzes that are made to know macroeconomic variants, must always be done in order to establish any type of political risk on the current economy or the future economy.

When foreign investments are accepted, this risk is doubled since the government that sells can camouflage the performance or even seize assets of the companies.

What strategies are used

This can be done by adjusting the expected cash inflows within a project. You can also do it using the discount rates that are adjusted to the risk of the total budget of the country.

The correct way to do it is adjust cash flows on individual projects that make use of a global scenario for different projects.

What happens when you invest abroad?

When they are accepted foreign investments, this risk is doubled since the government that sells can camouflage the performance or even seize assets of the companies.

This can be done by adjusting the expected cash inflows within a project. You can also do it using the discount rates that are adjusted to the risk of the total budget of the country.

The correct way to do this is by adjusting the cash flows on individual projects that make use of a global adjustment for different projects.

What are the most relevant macroeconomic variables?

Next, we will take a closer look at the most important macroeconomic variables:

Gross domestic product

Within macroeconomic variables, one of the first things considered is GDP. Este es el valor de los servicios y bienes de un país que son producidos por compañías. Además se contabilizan las persons que trabajan dentro del área durante un período de tiempo específico. Los sectores de la economía que están presentes en esta circunstancia son primario, secundario y terciario.

To be able to have a real macroeconomic variable, you should pay attention to all goods that have been produced in that country, regardless of whether they have been sold or not. The sum of everything also includes international companies. As an example, if we look for the variable for Spain, foreign companies will also be taken into account.

The risk premium

The risk or risk premium of a country, it is the second thing to pay attention to when calculating macroeconomic variants. The risk premium is the premium granted by investors when making purchases of a country's debt.

All investors require this additional cost to buy bonds in any country. Investors outperform when they take country buying risks to get a good return.

How is this premium calculated?

All countries issue bonds that are exchanged in secondary markets and in which the interest rate is fixed according to demand. The premium is calculated from the difference between the 10-year bonds that a country of the European Union has, compared to those issued by Germany.

Inflation

Inflation is one of the macroeconomic variables more importantly, because it is the one that directly indicates the generalized price increase.

In general, an account is made for one year and this not only includes the goods of a country, but also all services.

What factors occur within inflation

Within inflation there are many factors. One of the main ones is the demand; When the demand of a country increases, but the country is not prepared for this, there is an increase in prices.

The second is the offer. When this happens it is because the cost of the producers begins to increase and prices begin to rise to maintain their profits.

For social causes. This happens in the event that price increases are expected in the future, but collectors start charging more expensively ahead of time.

Interest rates in the macroeconomic variation

It is another factor that is taken into account for macroeconomic variations. Within a country, the most important interest rates are those set by the central bank. The money is loaned by the government to the banks and these banks in turn deliver it to other banks or to individuals.
When that money is loaned, it is based on the interest rates of that bank and must be repaid along with the rest of the money.

The exchange rate

Another important point in macroeconomic variables is the exchange rate. The exchange rate is always measured between two main currencies and this is also decided by the European Central Bank. The exchange rate is one of the most important points when it comes to knowing if the currency of a country is devalued or revalued.

Balance of payments

Payment balance It is something that you always have to pay attention to when trying to know the macroeconomic variables. Here what is counted are the financial flows that a country has during a certain time, which is usually one year.

Within the balance of payments there are several types to calculate the economic variant:

• Balance of trade. The trade balance is what accounts for the exports of the types of goods, as well as the types of income.
• Balance of goods and services. Here the trade balance and the services balance are added. This is where transportation, freight, insurance and tourism services come in, all kinds of income and technical assistance.
• Current account balance. Here the goods and services of a country are added, at the same time as the operations that have been carried out by transfers. This balance also includes the repatriations of immigrants who arrive in the country, the international aid that is given to many countries or the donations that are made to international organizations.
• Basic scale. Here we have the sum of the current account plus long-term capital.

Unemployment as a macroeconomic variant of a country

Unemployment in a country is the number of unemployed in a given country. The definition of unemployed is the person who wants to work but cannot find work and not all the people in a country who are not working at the time.

To know the unemployment rate of a country, the percentage of unemployed people must be exceeded with the number of the active population.
In order for a person to have access to the workforce, they must be over 16 years of age. Within Spain there are two means by which the unemployment rate can be measured and they are the state employment service or labor force surveys.

Supply and demand indicators in macroeconomic variations

For this case, the supply indicators are those that report to us on the economic offer of a country. Among these indicators are industry supply indicators, construction indicators and service indicators.
Regarding the demand indicators, they are consumption indicators, investment demand indicators and, finally, those related to foreign trade.

Aggregate supply and demand

This model try to establish the economic present analyze the production of a period and the existing prices using the aggregate supply and demand functions. It is the fundamental instrument for studying the different fluctuations in production and prices thanks to a mathematical model that can be represented graphically. Thanks to this tool, it serves to support the understanding of the consequences of different economic policies and as a consequence to be able to analyze the impact on macroeconomic variables.

The components to carry out this analysis are that of supply and aggregate demand.

• Aggregate demand: It is a representation of the market for goods and services. It is made up of private consumption, private investment, public spending and in the cases of open economies of net exports (exports minus imports).
• Offer added: It is the total amount of goods and services that are offered at different average prices. So this model is used to analyze inflation, growth, unemployment, and ultimately the role that monetary policy plays.

Microeconomic variables: what are they?

Are those variables that refer to individual economic behavior. They can be both companies and consumers, investors, employees and their interrelation with the markets. The items that come into play to be analyzed are generally goods, prices, markets and the different economic agents.

Depending on which individual agent is studied, some studies or others apply. As an example, in consumers the theory of the consumer is taken into account. From here, your preferences, budgets, usefulness of the products and types of goods, allow you to know how consumption will occur. In the same way, for companies there is the theory of the producer as a function of production, profit maximization and cost curves. With respect to markets, there is a tendency to analyze the structure and models of perfect and imperfect competition.