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Summary International Macroeconomics For Businness (MFB)
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The document consists of a summary of chapter 20 of the MFB book regarding the well-being of a nation.
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Macroeconomics for BusinessChapter 20: Measuring a nation’s well-being and the price level.
Economics is divided into two branches: microeconomics and macroeconomics.
Microeconomics is the study of how individual households and firms make decisions and
how they interact with one another in markets. Macroeconomics is the study of the
economy as a whole. Economies and the context in which they operate do not stand still,
and what was relevant about the way an economic system was thought to have worked in
one period does not necessarily mean that its mechanics and analysis can be transferred to
other time periods. For example the Great Depression of the 1930s, the policy options
which were appropriate to remedy some of the problems caused by the crisis may have
some similarities to the causes and consequences of the Financial crisis of 2007-9. However,
the world in 2007 was very different to the world of 1929-30.
Marxist economics:
Karl Marx’s analysis of economics and economic systems is based on the idea that ‘modern’
human history is dominated by class struggles and the exploitation of one class by another.
This exploitation is based on:
economic power,
slaves and slave owners,
feudal lords and peasants,
bourgeoise
capital owning class
the proletariat.
The policy was abandoned in favor of exchange rate targeting and inflation targeting.
The nature of macroeconomics:
The goal of macroeconomics is to explain the economic changes that affect many
households, firms and markets simultaneously. Economists analyze the economy as a whole,
as it provides an indication of the overall well-being.
1. Subjective well-being refers to the way in which people evaluate their own
happiness
2. Objective well-being refers to the measures of the quality of life and uses indicators
such as educational attainment, measures of the standard of living, life expectancy,
etc.
Having reasonable income means that people can afford to buy the necessities and luxuries
in live which contribute to subjective well-being. Countries with higher national income can
provide better quality education, more secure jobs, higher quality of housing,
infrastructures and healthcare, among other things, which affect objective well-being.
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