Relationship Between Macro and Micro Economic Indicators - 550 Words

Relationship Between Macro and Micro Economic Indicators (Essay Sample) Content: Relationship between Macro and micro economic indicatorsStudentà ¢Ã¢â€š ¬s nameCollegeAbstractMicro and macroeconomics are interlinked in the facets of any economy today. The relationship between both macro and micro has enhanced the economic performance of many economies. Productivity and consumption are embedded in the performance of many economies to micro and macro factors of an economy.IntroductionEconomics is a social science that specializes in the study of the different sectors of an economy through production, wealth transfer and consumption (Evans, 2005, p. 97). The broad categorization of economics later initialized the split to micro and macro economics. Microeconomics focuses on the individual economic entities in an economy. Microeconomics considers the firms and households. Macroeconomics focuses on the aggregate entities in the economy. Macro focuses on government spending, exchange rates and international markets through exports and imports. Levels o f economic performance are interlinked on the actual relations between macro and micro factors of an economy. However, econometrics has recently been used especially to exemplify the theoretical approaches of micro and macroeconomics. The essay discusses the actual relation of micro and macroeconomics on the levels of economic performance in a country, through the interactions of the individual actors in an economy and the aggregate players in the economy in measuring the levels of economic performance.ProductivityBoth economics subsets adequately accept productivity as a measure of economic performance. Microeconomics focuses on the actual productivity of the firms and households. Firms efficiently use resources such as labour, capital and land to produce goods or services and maximize profits. Households provide labour and land to the companies while also consuming goods and services produced. A company producing vehicles targets households and other companies to purchase such pro ducts. Production of vehicles depends on the disposable income of the households and the demand for such vehicles by businesses. China has over the past few years had high demands for vehicles used by households due to the increase in disposable incomes of its population (Brandt, 2012, p. 339). The state has in the past improved the road network to serve the burgeoning no of vehicles in the country adequately. The state has enhanced economic growth through increased government expenditure in infrastructure, the creation of employment opportunities and improving entrepreneurship through legislations and innovations. IMF reports indicate that the nation has increased productivity through micro and macro factors to enhance steady growth. Chinaà ¢Ã¢â€š ¬s policy on the tightly controlled currency and the export-oriented economic system has enabled the country to thrive in the long run. Macroeconomic indicators such as inflation and interest rates have been historically low in the count ry, spurring economic opportunities for the households and firms. Chinaà ¢Ã¢â€š ¬s economic growth has been progressive with the state expect to surpass the US by 2040, as the largest economy in the world. Micro and macro economic indicators relate to enhancing the direction of the economy.ConsumptionThe burgeoning population of the Chinese market has attracted many firms to the nation. Major manufacturers such as Apple, Toyota, Honda and Samsung have expanded in the nation to take opportunities in the country. China has low levels of unemployment, crime rates and high rates of skilled labour, extensive resources and an economic centered government (Huo, 2012, p. 30). Latest reports indicate increased foreign direct investments in the nation. Apple operates major production lines in the state for the assembly of Apple products. The state maintains low minimum wages, tightly controls the labour system and enhances safety nets for its workers. Consumption affects both facets of the e conomy. High consumption levels increase demand of products and services enabling firms to produce the goods and services at a profit. The state intervenes through interest rates in the event of inflation in the economy. The su...