Macroeconomics Asgn1.docVIP

Macroeconomics Assignment 1 Q.1 (a) Rising inflation in Brazil Strong GDP Growth in China are macroeconomics variables. (b) Macroeconomics variables are variables that can be used to measure with the whole economy. From module one we can see that unemployment, GDP and inflation are considered to be the most impertant macroeconomic variables.Rising inflation in Brazil Strong GDP Growth in our China are respectively measured with the whole economic in Brazil by analysing the rising inflation and China through analyse strong GDP growth. Q.2 As macroeconomic variables, unemployment and inflation are two important aspects of the performing of the economy. First, macroeconomists care about unemployment for two reasons: 1、Through the unemployment rate we may acknowledge that whether the economy is operating in the normal level. 2、The unemployment has the significant influence to the society Second, macroeconomists care about inflation because: 1、Inflation isnt a independent variable, it will effects other aspects of economy. 2、Inflation may result in the imbalance of the public wealth distribution. This absolutely affects income distribution. 3、On the other hand, inflation will creates other distortions such as investment decisions. Q.3 (a) Explain why the CPI and the GDP deflator move together most of the time. CPI, consumer price index, one of the indexes of inflation. It refers to a package of goods as compared with the overall price level, and reflect a currencys purchasing power.GDP, gross domestic product, the index of the economy growth. CPI reflects on aspect of the economic situation, so does GDP. The relationship between them depends on the overall economic development level. But, usually, the GDP means the nominal GDP, which refers to the GDP under the current level of monetary purchasing. Therefore, in the period of economic prosperity, GDP growth will bring the growth of personal disposable income and stimulate consumption and investment, leading to the