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Macroeconomic Problems

This document provides an overview of macroeconomic problems including the business cycle, unemployment, and inflation. It summarizes that the business cycle consists of periods of economic expansion and contraction. It also defines unemployment and inflation, describes how they are measured, and lists some of their causes and effects. Finally, it outlines some monetary, fiscal and direct policies that can be used to address unemployment and control inflation.

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Rifat Mahmud
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318 views14 pages

Macroeconomic Problems

This document provides an overview of macroeconomic problems including the business cycle, unemployment, and inflation. It summarizes that the business cycle consists of periods of economic expansion and contraction. It also defines unemployment and inflation, describes how they are measured, and lists some of their causes and effects. Finally, it outlines some monetary, fiscal and direct policies that can be used to address unemployment and control inflation.

Uploaded by

Rifat Mahmud
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Presentation on

MACROECONOMIC
PROBLEMS
Course Name: Managerial Economics
Course Code: FB-510
Course Teacher: Prof. Dr. Md. Rafiqul Islam
Submitted by
Faria Risat Faruquee
ID: 51532006
MBA (Evening)

Department of Banking and Insurance


Faculty of Business Studies
University of Dhaka
Macroeconomic Problems
• Macroeconomics is the branch of economics that studies the behavior
and performance of an economy as a whole.
• There are 3 basic macroeconomic problems

Macroeconomic
Problems

Business
Unemployment Inflation
Cycle
Business Cycle
• Business cycle is composed of periods of good trade with rising prices
and low unemployment percentages, followed by periods of bad trade
with falling prices and high unemployment percentages.
• Business Cycle prevails in all industries
• It is a wave-like movement in economic activity where an expansion is
followed by a depression
Phases of Business Cycle
Real GDP

Peak

Peak
Recovery
Recession

Trough

Phases of a Business Cycle


Phases of Business Cycle
Phases of a Business Cycle Economic Activity
Peak Output – Maximum Level
Unemployment – Lowest Level
Recession Output – Declines
Unemployment - Increases
Trough Output – Minimum Level
Unemployment – Highest Level
Recovery Output – Increases
Unemployment - Declines
Unemployment
• Unemployment is a state in which labour force participants are
available and willing to work but unable to find jobs

Numbers of Unemployed
• Calculations of Unemployment Rate (%) = X 100%
Labour Force
Types of Unemployment
1. Frictional Unemployment
2. Cyclical Unemployment
3. Structural Unemployment
4. Seasonal Unemployment
Effects of Unemployment
1. Effect on Individuals and Society
- Loss of income and self respect
- Loss of job skills
- Social and political problems
2. Effects on the Economy
Measures to Control Unemployment
Monetary Policy Fiscal Policy Direct Control Measures
1. Lowering the reserve 1. Increase in government 1. Job creation in various
requirements expenditures sectors in an economy
2. Lowering the discount rate 2. Decrease in taxes 2. Development of new land
3.Lowering the interest rate 3. Providing training and
technical education
4. Open market operations
Inflation
• Inflation can be defined as a continuous increase in the general price
level of goods and services in the economy.
• Degrees of Inflation –
- Creeping inflation
- Mild inflation
- Hyperinflation
CPI this year – CPI previous year
• Measures of Inflation: Inflation rate = X 100%
CPI previous year
Causes of Inflation

Cause

Demand
Cost Push
Pull
Inflation
Inflation
Effects of Inflation

Effects of
inflation

Distribution of Balance of
Savings Productions
income trade
Measures to control inflation
1.Open market operations
Monetory 2. Raising reserve requirement
Policy 3. Raising discount rate / interest rate

Fiscal 1. Increase in taxes


Policy 2. Decrease in government expenses

Direct 1.Price control and rationing


Control 2. Anti-hoarding campaign
Measures 3.Compulsory Savings

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