As the famous American economist, Milton Friedman quotes, “If you put the federal government in charge of Sahara Desert, in 5 years there would be a shortage of sand”, explains how important it is for a country to learn economic policies and sustain the use of resources. Macroeconomic policies largely deal with the performance, structure, behaviour and decision making of an economy as a whole. As a student of economics, Macroeconomics expects you to have a good understanding about GDP, economic growth, macroeconomics policies, stabilization policies, especially monetary policy and many other, on the completion of the units. And because, macroeconomics covers a wide range of topics, that it becomes difficult for even a scholar student to complete the assignments perfectly.
What Is Macroeconomics?
In general, economics is the study of how agents (people, firms, nations) use scarce resources to satisfy unlimited wants. Macroeconomics is the branch of economics that concerns itself with market systems that operate on a large scale. Where microeconomics is more focused on the choices made by individual actors in the economy (individual consumers or firms, for instance), macroeconomics deals with the performance, structure and behaviour of the entire economy. When investors talk about macroeconomics, discussions of policy decisions like raising or lowering interest rates or changing tax rates are discussed.
What Does It Talk About?
Some of the key questions addressed by macroeconomics include: What causes unemployment? What causes inflation? What creates or stimulates economic growth? Macroeconomics attempts to measure how well an economy is performing, understand how it works, and how performance can improve.
Why Is Stabilisation Policy Important?
As the quote given by Milton mentions the importance of learning certain macroeconomics policies that can help keep a record of economic growth and also control aggregate demand in the economy. This is exactly what stabilisation policy teaches you. It is a macroeconomic strategy enacted by governments and central banks to keep economic growth stable, along with price levels and unemployment.
Ongoing stabilisation policy includes monitoring the business cycle and adjusting benchmark interest rates. The goal is to avoid erratic changes in total output, as measured by gross domestic product (GDP) and large changes in inflation. It is seen that stabilisation of these factors generally leads to moderate changes in the employment rate as well.
You might get certain assessment on stabilisation policies and there are certain requirements that are posed by the professors that are supposed to be met in order to get high scores. This guide informs you about special areas of stabilisation policy in macroeconomics and how the assessments can appear.
Stabilisation Policy and Keynesian Economics Go Hand in Hand
According to the theories given by noted economist John Maynard Keynes, when the individuals within an economy did not have the buying power necessary to purchase the goods or services being produce that, in order to entice consumers, prices would fall. As prices fall, businesses could experience significant losses, resulting in an increase in corporate bankruptcies. As former employees of the now defunct companies joined the ranks of the unemployed, resulting in less buying power in the consumer market, prices would need to fall again.
This process was considered cyclic in nature, and in order to stop the cycle, fiscal policy changes would be required. Keynes suggested that, through policy creation, a government could manipulate aggregate demand to correct the trend. This way business cycle comes into existence.
Requirement of a Macroeconomics Assessment
Just like these policies, the entire macroeconomics has number of other policies to learn. Talking about the assessment that deals with stabilisation policy in macroeconomy, it demonstrates your theoretical and applied knowledge relating to the subject. It focuses on the macroeconomic section of the unit and builds on the economic fundamentals. The assessment would require you to indulge in the policies that are a part of the assessment question. Also, students are required to bring the information from the credible sources like journal articles, books, reports, published journals, etc., and also refer to the chapters outlined in the prescribed text book. They are of high relevance and, therefore, provide a substantial amount of credibility.
There are many parameters besides, writing style, referencing style, format and others, that are responsible for the marking scheme in your assessments. Adherence to these macroeconomics-specific parameters help the students to earn good grades. Some of the important ones can be described as:
- If you have given a proper Overview of the economic environment and the state of economy with regard to business cycle;
- If your solution achieves Macroeconomics goals: Monetary policy, intended objectives, the mechanism and impact;
- If your solution explains the main factors that influence the economy talked about in the question;
- If the assignment uses the required framework and many others.
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