Principles and Applications of Macroeconomics

Principles and
Applications of
Macroeconomic

Table of Contents
INTRODUCTION ..........................................................................................................................3
Uses of macroeconomic policies by government for improving economic welfare..................5
CONCLUSION ............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Macroeconomic is the branch of economy which studies the behaviour, performance,
decision making of a whole economy. Basically it deals in the government spendings, economic
structure, interest rate, taxes, GDP, employment rate, budgets and market structure, of a whole.
Microeconomics studies the overall scenario of the economy it main focuses what economy
performs as a whole. There are various kinds of different macroeconomic, but they studies the
behaviour of people how they act. There are some essential issues which must be take into
consideration while we study macroeconomic such as inflation and deflation, macro economists
sets various model which explaining the relationship between the factors such models are used
by the government to evaluate or construct the monetary, economic, and fiscal policies by
businesses to make business strategies in the global and domestic market (Sawyer, 2019 ). The
economy well-being is assign by the surplus or additions set by both of the consumers and
producers, and also analyse by comparing both the consumer and producers surpluses. The
macroeconomic theories and applications are very essential because it provides effective data for
the calculation of national income. Macroeconomics theory helps the investors and business to
make effective decisions by understanding the policies and effect of the economic trends. This
also concern with the economic welfare which helps in providing the wealth in an economy
among the people of economy. In the UK their economic welfare has a strong benchmark which
is also known as the “welfare state”. The UK economy is the highly developed market oriented
as well as social market economy. UK government sets strong focuses on welfare of its residents
and also on economic and social promotion. In this report we discuss about the challenges faced
by the UK government in past years which effects the overall working of the company.
Meaning and Objectives of Micro-economic Policies:-
Economics can be classified into two parts one is Micro-economic and second is
Macroeconomic. Macroeconomic is a branch of economic which studies the economy as a
whole. It deals with the structure, performance and decision making of the whole economy
whereas micro-economic is completely different from the macroeconomic. Microeconomic
studies the behaviour of an individual towards the resources utilization in effective and efficient
manner ( Anderson and Minarik, 2020 ).
 Sustainable Economic Growth: It refers to the development of economy which fulfil
humans needs but in that manner which sustains the environment and natural resources

for the future generation. There are various indicators helps to analyse changes in the
economy and that could be both positive or negative. If the distribution of wealth is equal
in every sectors of economy, then it do not create any kind of partiality and inequality of
distribution between different sections present in the economy. This step also enhance
the companies performance in a country and also helps to grow and expand in the other
countries.
 Inflation: Inflation refers to increase in the general price level of goods and services. It
refers to reduction in the purchasing power of currency over a period of time and also
decreases the money value. It can be due to the shifting of demand curve for product and
services provided. Increase in the rate of inflation shows the expansion and growth of a
country over a particular period of time ( Kashyap and Raghuvanshi, 2020 ).
 Balance of Payment: It indicated the transactions between the one country and rest of
the world over a particular period of time. It summarize and analyse transactions that a
company, government and individual do with the another countries company,
government and individual. Balance of payment includes major three accounts financial
account, current account and capital account.
Economic System of UK
Economic system refers to a system of production, allocation of resources and then distribution
of product and services with in a area, society. It regulates the production factors, involve land,
labour, capital and resources. Economic system are of three type followed by the different
countries in respect of their wants and needs. The country production level is decided by the
government of that particular country which helps them to set prices and must be involve at the
time of policies building because it can effect the system of economy. Socialist economic system
is implement by each country in respect of their policies which helps them to work for the
welfare of their country in a long run. Another capitalism system determines the output and price
by the private sector. They focuses later on the welfare of economy because their main motive is
to earn revenue and maximize the profit. In UK Mixed system used which means both the
socialist and capitalist system ( Nellis and Shirley, 2022 ).