Macroeconomic variables or MVs, are indicators of the overall state of a country's economy. Four Major macroeconomic variables are particularly important: Gross Domestic Product (GDP), Inflation rate, Fiscal Deficit and Current Account Deficit (CAD).
The government studies MVs and attempts to keep them at certain levels in order for the economy to function.
Gross Domestic Product (GDP):
The gross domestic product (GDP) is one of the primary indicators used to gauge the health of a country's economy. It represents the monetary value of all the finished goods and services produced within a country's borders in a specific time period. Though GDP is usually calculated on an annual basis (Year On Year-YOY), it can be calculated on a quarterly basis as well.
Inflation:
Inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling. Central banks attempt to limit inflation, and avoid deflation, in order to keep the economy running smoothly.
Fiscal Deficit:
A fiscal deficit occurs when a government's total expenditures exceed the revenue that it generates, excluding money from borrowings. Deficit differs from debt, which is an accumulation of yearly deficits.
Current Account Deficit (CAD):
Current account deficit is a measurement of a country's trade where the value of the goods and services it imports exceeds the value of the goods and services it exports.
A current account deficit means the value of imports of goods / services / investment incomes is greater than the value of exports. It is sometimes referred to as a trade deficit. Though a trade deficit (goods) is only part of the current account.
The government studies MVs and attempts to keep them at certain levels in order for the economy to function.
Gross Domestic Product (GDP):
The gross domestic product (GDP) is one of the primary indicators used to gauge the health of a country's economy. It represents the monetary value of all the finished goods and services produced within a country's borders in a specific time period. Though GDP is usually calculated on an annual basis (Year On Year-YOY), it can be calculated on a quarterly basis as well.
Inflation:
Inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling. Central banks attempt to limit inflation, and avoid deflation, in order to keep the economy running smoothly.
Fiscal Deficit:
A fiscal deficit occurs when a government's total expenditures exceed the revenue that it generates, excluding money from borrowings. Deficit differs from debt, which is an accumulation of yearly deficits.
Current Account Deficit (CAD):
Current account deficit is a measurement of a country's trade where the value of the goods and services it imports exceeds the value of the goods and services it exports.
A current account deficit means the value of imports of goods / services / investment incomes is greater than the value of exports. It is sometimes referred to as a trade deficit. Though a trade deficit (goods) is only part of the current account.
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