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Discuss the three main indicators used in macroeconomic analysis

Economics

Discuss the three main indicators used in macroeconomic analysis.

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  • Inflation, GDP, and unemployment are the three main indicators used in macroeconomics analysis.
  1. Inflation can be defined as the rapid increase in the prices of products in an economy. Two approaches are used when measuring inflation, and they include the Gross Domestic Product deflator and the Consumer Price Index. Consumer Price Index is the periodic update of the current price for certain products and services. It indicates if the trend is increasing, or decreasing. The GDP deflator indicates the nominal GDP ratio and the real GDP ratio. If the nominal ratio is higher than the real ratio, the price is assumed to be inclining.
  2. GDP (Gross Domestic Product) is the total output of a country in terms of products and services. It helps compare the different periodic outputs and determine the cycles that result from the output. Later, it determines the causes of the cycles.
  3. Unemployment analyzes the number of people who are not able to find work or have lacked jobs within a given period. A higher real GDP is an indicator of more people employed while a lower real GDP indicates higher unemployment rates in the country.

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