Measurement of a Country's Macroeconomy

Running Head: MEASUREMENT OF A COUNTRY’S MACROECONOMY 1
MEASUREMENT OF A COUNTRY’S MACROECONOMY
Student Name
Institutional Affiliation
Facilitator
Course
Date

MEASUREMENT OF A COUNTRY’S MACROECONOMY 2
Introduction
A country’s macro-economy indicates its economic performance, behavior, structure and
decision making as a whole. Economists measure a country’s macro-economy by analyzing
aggregate indicators which may include the gross domestic product, price indices,
unemployment and the interrelationship between different economic sectors. Macroeconomic
performance is reflected in the manner in which the set objectives and government policies are
achieved (Saviotti & Pyka, 2009). There are four key economic elements which are actually
considered in the measurement of a country’s macroeconomic performance. They include the
economic growth which is reflected by the real gross domestic product growth, inflation rates,
the rate of unemployment and the balance of payments (Fukuyama, 2015). Considering the
macroeconomic factors, an economic is said to be growing if the four factors mention above are
favorable. An economic growth occurs if the gross domestic product grows with time, inflation
rates are low (actually a better performing economy should set a target of not more two percent
level of inflation), unemployment rate decreases (this means that the economy is doing well as it
is able to create jobs for its citizens as well as the outsiders) and the balance of payments are
favorable (this means that the government debt both internally and externally is low). The most
crucial statistic in every country is the country’s economic growth as indicates the direction
(whether positive or negative) of growth of the country’s economy and its international
competitiveness considering the other countries level of economic growth. The major goal of
every country is to improve its economic to a world class level where all the four key economic
elements and other contributory factors are favorable (Perrow, 2016). However the achievement
of this depends on various factors the most crucial ones being the manner in which country’s
budgeted expenditure is utilized and the achievement of the set economic goals and government

MEASUREMENT OF A COUNTRY’S MACROECONOMY 3
policies. To achieve and maintain a positive economy is not an easy task but with dedication,
integrity and accountability of every citizen this is possible.
Economic problems facing modern societies
Today’s society faces many economic problems. The major issue arises due to the fact
that resources available are scarce while the human wants are unlimited (Miller & Rose, 2017).
The major issue of concern in most societies is how to efficiently allocate the scarce resources to
satisfy the unlimited wants and problems faced in the societies. Most of these economic
problems are worse in developing countries as compared to developed countries. Some of the
economic problems include unemployment, higher rates of inflation, unfavorable balance of
payments, the volatility of exchange rates, inequality in distribution of income and corruption
and embezzlement of public funds.
i. Unemployment
Unemployment refers to a situation whereby individuals who are qualified, willing and
actively seeking for jobs are not able to find them. In the modern society, this has become one of
the major economic problems not only to the less developed countries but also to the developing
and developed countries. One of the major causes of unemployment is the changes in business
cycles mostly the recession times of an economy (Sachs & Warner, 2015). Recession in an
economy refers to a situation whereby the economy is depressed and the demand for goods and
services during this period is low. Due to these bad economic times, most workers are laid off as
most businesses in the economy make losses and hence face the problem of settling salaries and
some other business expenses. Unemployment may also be caused by lack of relevant skills
required in the job market. Most of developing and less developed countries face a situation

MEASUREMENT OF A COUNTRY’S MACROECONOMY 4
where their level of education is relatively poor compared to developed countries. The education
offered in most of these countries is of poor quality and irrelevant as compared to skills required
in their areas of expertise. Most industries are reluctant to employ those who lack relevant skills
to their operations and as a result the level of unemployment increases. Jobs are available but
individuals lack relevant skills required by the industries. Generally, the measurement of the
macroeconomic performance in a given country considers the level of unemployment. An
economy which has low rate of unemployment is said to be doing well as it can create jobs both
internally and externally and hence improve individuals’ living standards. The modern society
faces the problem of unemployment as most people ranging from skilled, semi-skilled and
unskilled are unable to find work. This should be the major issue of concern by the government
in these societies and should work towards eliminating or minimizing this problem in order to
improve the individuals’ living standards and the entire economy.
ii. Inflation
Inflation refers to a situation whereby the general prices of goods and services rise over a
given period of time (Burdekin & Burkett, 2009). This is one of the major problems in the
modern society. It creates future uncertainty in as much as investment is concerned. This may
force most investors not enter the market due fear of the unforeseen future. Also, if the
employees’ salary is not adjusted accordingly, they end up experiencing a decline in their
standards of living and consequently their level of expenditure declines. The entire economy may
end up declining as a result. The government should adequately address this problem and if any
inflation occurs, then it should not exceed two percent.
iii. Unfavorable balance of payments