ECO 211 - Macroeconomics Problems Analysis

ECO 211
WRITTEN REPORT (GROUP ASSIGNMENT)
PREPARED BY :
● Julia Qaisara Binti Mohd Farizal (2019443274)
● Maizatul Amirah Binti Mohd Redzuan (2019232568)
● Nur Afiqah Adila Binti Amir Ruddin (2019428338)
PREPARED TO :
MADAM NOR AZIRA ISMAIL

ACKNOWLEDGEMENT
Alhamdulillah, first of all we would like to thank Allah S.W.T as finally we were able to finish
our report that has been given by our lecturer. This task had been done with all afford by our
group members which consist of Julia Qaisara Binti Mohd Farizal, Nur Afiqah Adila Binti
Amir Ruddin and Maizatul Amirah Binti Mohd Redzuan. Even though we have been faced
with a little hardness while completing this report, luckily all of our group members can settle
down our problem. We always want to work hard to produce a good report with our full
commitment and also our responsibility.
Next, we would like to express our heartfelt thanks to our Fundamentals of
Economics (ECO211) lecturer, Madam Nor Azira Ismail for giving us this opportunity to carry
out this written report as well as giving continuous great support projects and guidance to us
for the whole semester of our project.
Furthermore, a big thank you also we address to our family members that support us
by giving motivation and ideas to continue in order to make a good report. They also
understand our situation and keep giving support.
Last but not least, a million thanks also we wish to our friends because they also help
us in giving the latest information about the guideline to do this report. We all together share
the information that we get from the lecturer and struggle together to complete the task that
is given by the lecturer.
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TABLE OF CONTENT
NO CONTENT PAGE
1. Acknowledgement 2
2. Introduction 4-6
3. Analyzing Current Macroeconomics
Problem
7-9
4. Measures to Overcome the
Microeconomics problem
10-12
5. Conclusion 12
6. References 13
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INTRODUCTION
As we know inflation and unemployment are the two major macroeconomic problems in the
economy. Inflation is defined as a persistent and sustained increase in the aggregate or
average price level of goods and services in an economy. An inflation implies that there is an
increase in the cost of living that causes lower purchasing power. It is a situation where there
is ‘too much money chasing too few goods’. There is an inverse relationship between
inflation between inflation and the value of money. When inflation is high, the value of money
will be lower, and vice versa. This is because the consumers now will not buy as much today
as yesterday and there is a loss of the value of a currency that happens with inflation.
Next, is unemployment that occurs when people who are in the working age group are
able and willing to work, but are unable to find suitable jobs. Unemployment represents the
number of people in the workforce who want to work but are unable to get jobs and it is often
used as a measure to gauge the health of the economy in a country. There are two
situations that unemployment may occur which is voluntary or involuntary. For voluntary
unemployment, it tends to happen when there is a job available, but because of the going
wage rate the unemployment person is not willing to accept. The ‘unemployed’ or
‘involuntary unemployment’ tend to happen when the person cannot find a job but is willing
to accept a job at the going wage rate. For instance, workers fired due to an economic crisis,
industrial decline, company bankruptcy, or an organizational restructuring is included in the
involuntary unemployment. Indeed, involuntary unemployment is a serious social concern,
because it causes economic waste due to lost output and it is a source of human suffering.
Formula to calculate an inflation :
❖ Inflation is measured by the consumer price index (CPI) date over a period of months
or years.
I. Rate of inflation : Inflation = CPI current year - CPI previous year x 100
CPI previous year
In order to calculate the CPI, the formula is shown below :
II. Current Year Price Index = Current year price x 100
Base year price
Simple CPI = Current year index of all items
Number of items
4