Functions of macroeconomics:
1. Cognitive - explains the patterns of development of the national economy, causal relationships in the economy, the phenomena of the economic life of society, gives an understanding of the general goals and objectives of economic development.
2. Applied - macroeconomics can provide practical advice and recommendations for an effective economic policy.
3. Methodological - other sciences can use for their own purposes the macroeconomic results of studying the functioning of the national economy.
Macroeconomics, solving the problems of the national economy, pursues specific, most important goals:
1. The growth of national production, providing the population with goods and services.
2. Reducing unemployment, increasing employment.
3. Ensuring a stable price level and minimal inflation.
4. Ensuring an active balance of payments.
Along with the standard methods of scientific research, which are universal for many sciences and more specific methods of understanding economic phenomena and processes, macroeconomics actively uses its own methods, dictated by the peculiarities of the approach.
Methods of macroeconomics - this is a set of means, methods for studying the subject of a given science, i.e. specific set of tools.
Method - this is a set of techniques, methods, principles by which ways to achieve the goals of the study are determined. They can be divided into general scientific and specific research methods.
General scientific research methods include the method of scientific abstraction, analysis; synthesis; induction; deduction; the unity of the historical and the logical; system-functional analysis, etc.
Basic methods of macroeconomic analysis
are:
abstraction;
system method;
dialectical method;
using both verbal and mathematical
aggregation of research objects.
1. Method of scientific abstraction consists in transferring the object of study from specific, real phenomena or processes, usually depending on time, place and random events, to the model level. Method of scientific abstraction manifested in the creation of economic theories of individual economic processes, using economic laws, categories and principles of the functioning of the national economy. It combines two main techniques - induction and deduction. Induction is the construction of a theory from facts. Deduction is the derivation of certain facts from a theory.
2. System method- determines the relationship and mutual position of the individual components of the national economy, as well as its structure.
3. Dialectical method- means the unity of quantitative and qualitative analysis, the development of phenomena and processes, overcoming contradictions. There is a general method of understanding the economic life of society. Any phenomenon is considered from different angles, with the allocation of cause and effect, correlation dependence.
Main specific research methods in macroeconomics are aggregation and modeling .
Modeling is a description of economic processes or phenomena in a formalized language using mathematical symbols and algorithms in order to identify functional dependencies between them.
It allows you to get a fairly complete picture of the nature of the processes taking place in the economy, to determine the trends in their development.
In macroeconomics, many economic and mathematical models are used, which can be classified as follows:
Abstract-theoretical and concrete-economic;
Short-term (prices for some goods and services are not flexible and do not adjust to changes in demand) and long-term (prices are flexible and respond to changes in supply and demand);
Linear and non-linear (the nature of the relationship of elements);
Closed (representing only the national economy) and open (taking into account the impact of the “rest of the world” sector on the national economy);
Equilibrium and non-equilibrium;
Static (all economic indicators are tied to a certain point in time) and dynamic (the temporal relationship of economic indicators is considered).
In macroeconomics, economic models are widely used - this is a simplified description of various economic processes occurring in the economic life of society.
To build a macroeconomic model, it is necessary to use a number of the most significant factors suitable for macroanalysis of a specific economic problem for a certain period of time.
Models can be graphical, tabular and economic-mathematical. However, the main thing in them is the ability to reflect the real economic reality.
When building a model, exogenous (external) and endogenous (internal) variables are used.
Exogenous variables are input data obtained before building the model.
Endogenous variables are data obtained within the model in the course of solving a specific problem.
Distinguish between positive and normative macroeconomics. Positive macroeconomics - analyzes the actual functioning of the economic system. Normative macroeconomics - determines which factors are desirable and which are negative, i.e. is recommendatory.
Aggregation- consolidation of economic indicators by combining them into a single general indicator (creation of aggregates, aggregate values).
Aggregate values characterize the development of the economy as a whole: gross product (rather than the output of an individual firm), general price level (rather than prices for specific goods), market interest rate (rather than individual types of interest), inflation rate, employment rate, unemployment rate etc.
Macroeconomic aggregation applies primarily to economic entities that are grouped into four sectors of the economy:
1. household sector;
2. business sector;
3. public sector;
4. sector "rest of the world".
Household sector - a set of private economic cells within the country, whose activities are aimed at meeting their own needs.
Households are the owners of the factors of production. By selling or renting them, households receive their income, which they distribute between current consumption and savings.
Entrepreneurial sector is the total of all firms registered within the country. A firm is an organization created for the production and sale of goods and services. The economic activity of the business sector is reduced to the demand for factors of production, the supply of goods and investment.
Under public sector refers to the activities of state organizations. The economic activity of the state as a macroeconomic entity is manifested in the production of public goods, the implementation of social programs, the redistribution of the national income of the country, the regulation of foreign economic activity, etc. In performing its functions, the state focuses primarily on satisfying the interests of society as a whole.
Rest of the world sector (overseas) - These are economic entities that have a permanent location outside the country, as well as foreign state institutions. The influence of the "rest of the world" on the national economy is carried out through the mutual exchange of goods, services, capital and national currencies.
Macroeconomic aggregation extends to markets as well. The set of markets at the macro level includes the following types :
Market of goods and services (market of goods);
Financial market;
The market for factors of production.
The whole set of markets for individual goods, which is the subject of study of microeconomic analysis, is combined in macroeconomics into a single market for goods, in which only one type of goods is bought and sold, which is used both as an object of consumption and as a means of production (real capital).
As a result of the collapse of the entire set of real goods into one abstract good, the microeconomic concept of the price of a good disappears as the proportion of the exchange of one good for another. The subject of study is the absolute price level and its change.
The markets for production factors in macroeconomic models are represented by the labor market and the capital market. At the first, one kind of labor is sold and bought; at the second, entrepreneurs buy funds to expand production (compensation for depreciated capital occurs through depreciation). The additional capital necessary for the expansion of production is created as a result of the savings of economic agents. Since they are formed by buying securities (bonds, shares), opening savings accounts in banks, the capital market is also called the securities market.
The role of money in the modern economy is explored through a specific macroeconomic instrument - the money market, in which, as a result of the interaction of supply and demand, the price of money is formed - the interest rate.
The goods market and the labor market together form the real sector of the economy, and the money market and the securities market form its monetary sector.
The obvious costs of macroeconomic aggregation are the partial loss of information and the increased level of abstraction in economic research. However, a high level of abstraction is a conscious method of macroeconomic research, consistent with their goals. Thus, microeconomic observation of the household aims to find out why the demand of one individual differs from that of another; as a result, it turns out that a large number of factors influence this: income, individual preferences, age, marital and social status, place of residence, etc. When studying the household sector in macroeconomics, the main goal is to explain the fluctuations in the volume of consumer demand over time; in this case, all of the listed factors, except for income, are mutually neutralized in the course of aggregation.
In order for aggregated categories not to lose their economic meaning and scientific value, it is necessary to follow certain rules that are developed in the national accounting system
3.Macroeconomic agents. Macroeconomic Markets.
Macroeconomic agents
We have already said above that all subjects of economic relations are subjects of economic relations, i.e. all those who participate in the processes of production, distribution, consumption and accumulation of goods are combined into four groups (sectors): households, firms, the state and the outside world.
The main selection criteria are the functions of the agent and sources of funding that determine its economic behavior. To household sector include persons or groups of persons who have their own source of income, dispose of this income in the common interest and, as a rule, live together. It can be both families consisting of several people, and individuals.
Households receive income primarily as owners of economic resources (factors of production). Recall that economic resources are those economic (i.e. limited) benefits that are necessary for the production of all other goods and services. The standard set of what is needed for production includes natural resources (land, minerals), physical capital (buildings, equipment), labor (employee labor) and entrepreneurial talent (the ability to organize production and the willingness to take risk for financial results). ). In the production of various goods, each type of resource is more or less important than others.
Typically, in a modern industrialized economy with large commodity production and a developed service sector, capital and labor are the main factors.
Households receive income from production in the form of rent, interest, wages and profits.
In some situations, ownership of resources occurs indirectly, through the acquisition of equity securities of firms, such as shares; shareholders receive income from profits in the form of dividends. In addition, households can finance the acquisition of resources by businesses by earning income from loans in the form of interest.
In addition to domestic production, the state, of course, also acts as a source of income for households within the country. On the one hand, by buying government bonds, households participate in financing the state budget deficit (lack of funds due to excess spending over income) and receive interest on them. On the other hand, the state performs the function of social insurance and provision of citizens, paying various benefits and pensions (for old age, disability, unemployment, etc.). Such unilateral payments, in which there is no mutual exchange of goods, are called transfer payments , or simply transfers .
Households can receive income from abroad: from the participation of their resources in production on the territory of other countries or in the form of transfers.
Households use part of the income received after payment of income tax and mandatory non-tax payments to purchase goods and services. The other, unspent part of income is household savings. In an ideal economy, a rational individual does not keep savings at home, "in a stocking", since in this case there are opportunity costs in the form of lost profits. He invests his savings in financial assets that generate income, thus opening up access to this money for firms and the state.
So,the main functions of the household sector , determining its role in the economy are:
Providing the resources at their disposal to firms for use in the production of goods and services;
Presenting demand for goods and services and spending a significant part of the income received on consumption;
The accumulation of savings that are used to finance business and lend to the state.
Sector of firms (enterprises) is a set of economic agents that produce goods and services sold on the market, and thus receive the main income in the form of proceeds from their sale.
The production activity of this sector includes not only the process of processing raw materials and the creation of a new product, but also the provision of commercial services (including financial services), the activities of distributors, importers - firms that resell goods without usually changing their quality.
In order to produce goods or services, companies attract the resources of households, while the owners of all resources, except state ones, remain people (even the firms themselves also belong to their owners). For the use of resources, firms pay wages, rent, interest to households, entrepreneurs receive income in the form of profit. It is the sphere of production that is the main source of income for the population, transfer payments from the state are nothing more than the result of the redistribution of income earned in production.
Some resources acquired by firms (for example, machines, machinery, equipment, real estate) are used in production for several years, participating in the creation of income not only in the year of their acquisition, but also in the future. Firms investing in production in order to generate income in the future is called investments firms .
Any production process begins with investments. They are also needed to maintain output, since buildings and especially equipment wear out during operation and are gradually retired, thus reducing the stock of capital in the economy. When the value of investment expenditures exceeds depreciation expenditures, the stock of capital grows, and with it the country's productive capacity increases (ceteris paribus).
For investments in production that pay off within a few years, firms need money. With a lack of own funds for investment, they have to turn to the services of creditors or increase the number of owners by issuing shares.
In this way, the main functions of the sector of firms, or businesses , are:
Production of goods and services and satisfaction of the needs of economic agents for goods;
Involvement in the production of resources available in the economy and payment of income to their owners;
Investing in the manufacturing sector that will increase production and income in the future.
Together with households, firms make up private sector of the economy .
The functioning of the modern economic system is impossible without public sector , which in macroeconomics is understood as a set of organizations and institutions financed from the budgets of different
levels for the provision of non-market services (such as national security, law enforcement, healthcare, education, etc.), the redistribution of income in society and the conduct of economic policy.
Even if we assume that the state does not interfere directly in the economic sphere in any way, but only creates a legislative basis for the activities of business and households, guarantees property rights and controls compliance by all participants with the established “rules of the game”, its significance is enormous. Otherwise, the normal functioning and development of the market would be impossible.
But, of course, the influence of the state, even in the most free, market system, is not limited to legal activities. One of its most important economic functions is to provide for the economy legitimate, generally accepted means of exchange and payment , i.e.money .
It must be admitted that the market, even without the state, would have created some kind of recognizable and recognized means of payment, the use of which, when exchanging some goods for others, would significantly simplify and speed up the conclusion of transactions.
There were many examples of such money that appeared without the participation of the state in the history of mankind: gold and silver, cattle and furs, salt and cigarettes, shells and animal teeth, promissory notes (bills) of private firms, and much more. As money, either a commodity was used, no less valuable than the benefits that they were paid for, or something symbolic, which in itself has no value or has a relatively small value, but is recognized by the participants in the transaction. However, neither commodity nor symbolic non-state money satisfies the needs of the modern economy. When using commodity money, the amount of means of payment in the country is limited by the available stock of this commodity. In addition, some of it is usually used for its intended purpose. The impossibility of increasing the money supply in line with the growth of production and trade sooner or later becomes a factor holding back economic growth. The use of several goods as money, on the one hand, solves the problem of the sufficiency of means of payment only temporarily, on the other hand, complicates the exchange process, reduces the "transparency" of markets and their efficiency.
In the case of symbolic money, the exchange is possible only when the seller of real goods is confident in the ability of these "symbols" to continue to be exchanged for goods and services. Without state guarantees in the modern economy, the functions of means of payment could be performed by securities of specific firms, banks, or even individuals.
True, the solvency of such money would depend on the prosperity of the issuer and would fall to zero if it went bankrupt.
Such a system of monetary circulation would be quite risky for the population and probably not very convenient.
The state, by assuming obligations to issue money and guaranteeing their ability to be exchanged for real goods, solves problems that the market is less efficient at dealing with. In addition, by regulating the amount of money in circulation, it can change it in such a way as to meet the growing needs of the economy: the lack of means of payment ceases to be a problem hindering economic growth.
No less significant functions of the state stem from the inability of the market system to ensure the efficient use of resources in some situations. Even the most developed market does not solve all the problems facing society. "Failures" of the market at the microeconomic level are associated with the imperfection of competition and the strengthening of monopoly tendencies to the detriment of consumers, insufficient production of public goods due to their "non-excludability" property, inefficient use of resources in the presence of "externalities", incompleteness and asymmetry of information in the markets
If not in all, then in most cases, the state can eliminate or minimize the negative consequences of the imperfection of the market mechanism by assuming some of the functions (for example, by providing services to the population in the field of health care, education, law enforcement, regulation of the activities of natural monopolies) or by creating appropriate conditions for business.
At the level of the entire economy, the market mechanism is also not ideal. Unemployment, inflation, periodic downturns in economic activity, crises, significant income inequality, and social unrest are typical features of a market system. Even in the most prosperous countries, people lose their jobs and savings due to financial crises and are sometimes pessimistic about the future. But today, the severity and possible consequences of these problems are incomparable with what happened in relatively recent history.
The state constantly monitors the state of the economy, monitors the dynamics of the main macroeconomic indicators and adjusts the policy in such a way as to prevent the deterioration of the economic situation or, at least, reduce the negative consequences.
Measures aimed at achieving full employment of resources, reducing inflation to an acceptable level that does not create problems for households and businesses, and ensuring conditions for sustainable economic growth form the basis of stabilization policy. To carry out such a policy, the state has in its arsenal methods of fiscal, monetary, and currency regulation.
The activity of the state is impossible without tax revenues. Taxes are levied primarily on the income and property of the private sector (direct taxes), as well as some of its activities, including the purchase of goods and services (indirect taxes).
However, the significance of the tax system is determined not only by state financing. By levying taxes on income-earning citizens and paying pensions and benefits to people in need of social protection, the state performs the function of redistributing primary incomes and reducing the degree of inequality in society.
Business taxation, in turn, in the presence of different tax rates and tax incentives, leads to the redistribution of non-specific production and financial resources between industries, changing the structure of the economy. For example, by providing a number of benefits to small businesses, the state promotes the development of small private production. And since in most cases small business operates in the service sector, which is usually more labor intensive than the production of goods, such a policy simultaneously successfully solves the problem of reducing unemployment. Reducing the level of taxation of firms actively investing in capital assets (construction, purchase of equipment) stimulates the growth of the country's production capabilities.
So, the role of the public sector in the economic system defined by its functions, such as:
Creation of legislative bases for the functioning of the economy and control over their observance by all economic agents; guarantees of property rights;
Providing the economy with the national currency and regulating monetary circulation;
Overcoming "market failures" and the production of non-market services (ensuring national security and law and order, healthcare, education, etc.);
Pursuing a stabilization policy aimed at maintaining aggregate output, reducing unemployment, inflation and creating conditions for sustainable economic growth;
Redistribution of income and provision of social protection to citizens;
Redistribution of resources between different sectors of the economy with the help of fiscal and other types of economic policy instruments.
Taken together, households, firms, and the government are national economy .
Households, firms and the public sector of other countries are in macroeconomics to "external the world" , or foreign sector . However, such a division is rather conditional, since firms and specialists
can work on the territory of other countries both for a short time and for years. In this case, it is more convenient to use the concepts of "resident" and "non-resident". Residents all economic agents are considered, regardless of nationality and citizenship, residing or engaged in production activities in the economic territory of the country for at least a year. Residents also include diplomats, students and military personnel of the country abroad, regardless of the length of their stay. In the terms "resident" and "non-resident", the "outside world" refers to non-residents.
If foreign economic agents are allowed into domestic markets, and national economic agents enter foreign markets, the economy becomes open to the flow of wealth, resources, and financial capital.
First of all, consider the country's participation in world trade in goods and services. If the goods produced on its territory are purchased and consumed by the foreign sector, the country exports the domestic product. Exports can be both visible, in which case the flow of goods crosses the border of states, and invisible, when the foreign sector uses services produced in the territory of the exporting country. Such services include tourism, insurance, banking and other services that are not registered when crossing the border.
Imports, on the other hand, are purchases by national economic agents of foreign-made goods. With visible imports, goods are brought into the territory of the country, with invisible imports, there is a consumption of services provided by the "outside world" abroad.
The possibility of free export-import of goods usually leads to increased competition within the country due to foreign substitutes for domestic goods and helps to equalize prices. The policy of imposing import duties, import quotas, which makes foreign goods more expensive in the domestic market and restricts their import is called protectionism .
In addition to the exchange of benefits between countries, the movement of the resources themselves (for example, the movement of labor) and financial capital is possible. When the citizens of our country open accounts in Swiss banks or buy property on the Italian Riviera, and companies list their shares on the London Stock Exchange or take out loans from French bankers, there is a movement of financial flows across the border. The acquisition of real and financial assets abroad leads to the export of capital from the country, the sale of domestic assets to the outside world is accompanied by the import of capital into the country.
It is clear that, along with goods, resources and financial assets, the currency of different countries also moves across the border. All transactions of residents with the outside world are recorded in the country's balance of payments. The receipt of foreign currency is taken into account in the balance sheet with a "plus" sign, the expenditure of currency - with a "minus" sign. The difference between these values shows the net inflow (or outflow) of foreign currency, while the value of the stock of this currency among residents changes.
Macroeconomic Markets
In a real economy, all economic agents meet and interact with each other in a variety of markets for a wide variety of goods and services, the securities market, the foreign exchange market, etc. According to the type of good bought and offered for sale in each market, they can be grouped into four groups: commodity market, resource market, financial market and foreign exchange market.
commodity market belongs to the real sector of the economy, it buys and sells goods that have real (not conditional, like, for example, securities) intrinsic value. Food, clothing, household appliances, computers, legal, medical and educational services, production equipment and building materials - all the benefits that are produced in the country are exchanged on the commodity market.
Aggregated Commodity Market has all the attributes of a regular market. Demand and supply are also formed on it, equilibrium is established. However, since this is a market where everything that is produced in the country is sold and bought at once, it has many features.
Firstly, buyers in this market are not only people, but also firms, and the state, and the outside world, i.e. all sectors of the economy. The production sector offers goods for sale, i.e. firms operating in the country.
Secondly, the volumes of supply and demand in this market cannot be measured in physical terms, since it makes no sense to add tons, cubic meters, decalitres and other units of goods in individual markets to each other. The only way to do this correctly is to move to monetary indicators. In macroeconomics, the quantity of all goods and services - produced, sold, offered for sale, exported, and others - is measured in money as the market value of the corresponding bundle.
Thirdly, the commodity market price is also special. First of all, it must be said that this is not the arithmetic average of prices for specific goods, as it might seem at first glance. Moreover, this indicator is not even measured in monetary units. This is an index, the value of which shows the general level of prices in the economy in the period under review compared to the period (base period) taken as a “reference point”. If, for example, the price index in the current year is two, this means that the total market value of goods and services produced in the country is twice as high as their value in base year prices1. When the general price level in an economy rises from period to period, this is called inflation
Aggregate (aggregate) demand in the commodity market is the total market value of the goods that all economic agents are willing and able to purchase at each possible price level.
Aggregate (aggregate) supply shows the total market value of goods that firms are willing to produce and sell at each possible price level. At the actual price level, the volume of supply in the commodity market is equal to the market value of the product produced in the country. Since foreign goods and services are also sold in markets in a real economy open to imports, the total value of imports is subtracted from total domestic sales to determine domestic production.
If, at the current price level, all economic agents are willing and able to purchase such a quantity of goods and services that is offered for sale (i.e., the volume of aggregate demand is equal to the volume of aggregate supply), then an equilibrium situation has developed on the goods market.
Changes in aggregate demand or aggregate supply bring the market out of equilibrium. If effective demand grows, firms expand production, attracting more resources; households receive more income, the state collects more taxes. All three sectors of the national economy have an incentive and opportunities to acquire more goods in the future. The lack of aggregate spending in the commodity market can lead to a decline in production, unemployment and lower incomes. Periodic fluctuations in aggregate output, income, employment and other macroeconomic indicators are calledbusiness cycles activity , or simply "business cycles" . If at the same time, on average, over a sufficiently long period of time, aggregate production and incomes grow, then the country is the economic growth .
On the resource market firms attract the resources they need to produce goods, while households remain their owners, and the right of temporary use of these resources in the production process passes to firms. Firms are sometimes said to buy resource services in the factor market.
Although, as already mentioned, to Economic resources include labor force, physical capital, land with its wealth and entrepreneurial abilities of people, it is the labor market that attracts the most attention. This is due to many reasons. First of all, the fact that the share wage labor accounts for the bulk of factor income (in developed countries, this share is about two-thirds), which means that labor is the main source of livelihood for households.
In addition, for many people, work is important as a way of self-realization, the opportunity to communicate with people of similar interests. The loss of a job is often perceived as a personal tragedy, and when this phenomenon becomes widespread, for example during crises, or becomes chronic, it creates problems for the whole society. But it is the labor market, to a greater extent than all other factor markets, that is characterized by the incomplete use of resources - unemployment.
Since only part of the population is economically active, i.e. capable and would like to participate in social production, only it can be an economic resource, a labor force. Accordingly, unemployment occurs if not all the economically active population has a job, some citizens are in search or, like seasonal workers, are waiting to go to work.
Obviously, in reality, the labor force is heterogeneous: it is hardly possible to find two absolutely identical workers in terms of profession, education, qualifications and personal qualities. However, unlike the microeconomic (industry) market, macroeconomic models do not take into account these differences, although in general these markets have many common characteristics.
Like in the industry labor market , in macroeconomics, the demand for labor shows how much labor firms would like to use in the production process at any possible wage rate at the moment under the prevailing economic conditions. The supply of labor is determined by the amount of labor that households are willing to offer to firms at any possible wage rate. The market will come to equilibrium if, at the current level of wages, firms are ready to hire everyone who wants to work, i.e. the number of jobs corresponds to the size of the labor force.
On the firm's capital market buy the services of capital owned by households. This usually happens if entrepreneurs use buildings and equipment they own or rent it from other owners. The "price" of raising equity capital is the cost of lost opportunities, for example, in the form of bank interest rates on deposits. And the "price" of the leased capital cannot exceed the interest rate on loans, since then it would be more profitable for the firm to acquire capital goods in the commodity market using borrowed funds. Therefore, in many macroeconomic models, the interest rate acts as the "price" of capital. More "advanced" theories also take into account the degree of depreciation of capital during operation.
The quantity of capital goods, like all other goods, is measured in monetary units.
land market usually considered at the microeconomic level. Since the supply of land is limited and we can only talk about the transfer of ownership of specific plots, this market is not of interest to macroeconomics.
Financial market includes the money market and the financial asset market.
Discussing the economic functions of the state, money has already been mentioned as a generally recognized, recognizable means of exchange and payment. Let us add that one of the most important properties of money is their liquidity , i.e. the ability to quickly and without additional costs to exchange for other assets. In fact, it is this property that explains why people want to have money, because in themselves they are of no value, and their storage does not bring income. Only the guaranteed possibility of exchanging certain symbolic signs for real goods and services makes these signs money and ensures demand for them from economic agents.
The central bank of the country has the monopoly right to issue money (issue). However, the total supply of means of payment (money supply) is influenced by the entire banking system, i.e. and commercial banks.
The price of money is also not an abstract concept, as it might seem at first glance. Although there is no explicit purchase of hryvnia for hryvnia, even owning your own money is not free. When it is possible to use this money for the purpose of generating income - to put it in a bank at interest or to purchase securities, the price of owning money is this lost income , which they could bring to the owner (in the simplest case, this is the interest on deposits in commercial banks). For an economic agent in need of money, the price of receiving money is equal to the percentage of the loan amount that he must pay to the lender.
In the real economy, there are many interest rates: for different types of deposits (deposits) and loans. Macroeconomic theory abstracts from this diversity. As the price of money, you can focus, for example, on the interest rate on central bank operations (discount rate, or refinancing rate)
In this way, demand for money (those. demand for liquidity ) shows how much money economic agents want to use at each possible interest rate, and the supply - how much money at each possible interest rate can be in the economy. Lack of money leads to an increase in interest, i.e. rise in price of money and loans, their excess - to reduce and interest, and, accordingly, the price of money.
Compared to money financial assets have much less liquidity. Their main advantage belongs to another area: they bring income to their owner. In fact, the choice between holding money and acquiring financial assets comes down to a choice between liquidity and profitability.
The most common financial assets are savings and term bank accounts, securities.
In macroeconomic theory, two types of securities are usually considered: ordinary shares (equity securities) and bonds (debt securities).
Stock issued by firms to raise funds for investment in production without resorting to loans. At the same time, the size of the company's equity capital increases, and the company's share per share decreases. The owner of an ordinary share is entitled to a part of the profit remaining at the disposal of the company after taxes - a dividend - and can participate in the management of the company within its share.
Bond is a security that confirms the fact of borrowing. It brings the owner (lender) a fixed income, usually as a percentage of the loan amount. In the real economy, both firms and governments can issue bonds. However, firms do so relatively rarely, preferring to borrow from financial intermediaries such as commercial banks. Therefore, bonds in macroeconomics are usually understood as government securities issued to finance the budget deficit and conduct monetary policy.
Regardless of the placement price of securities (nominal value), in fact, their market price is determined by the yield they bring to the owner. The profitability determines how much money economic agents with savings would like to invest in these assets, i.e. the demand for them. The volume of their supply also depends on the yield that their issuers must provide to buyers of securities. For simplicity, in many theoretical models, the interest rate is taken as the return on securities.
The risks associated with securities are usually not taken into account.
On the foreign exchange market the national currency is exchanged for money issued by other states.
The supply of foreign currency on the territory of the country is primarily determined by the volume of foreign exchange earnings of firms - exporters of the domestic product. Other sources are household factor income from the use of their resources abroad, income from the sale of financial assets and real estate to foreign economic agents, loans provided by the outside world to the national economy, foreign economic assistance and private transfers.
Demand for foreign currency is primarily presented by importing firms. They need it to pay for goods produced abroad. The other most significant motive for the demand for foreign currency may be its use as a store of value or reserve. True, only a very limited number of currencies can perform this function more or less successfully. In addition, foreign currency is needed to pay for resources provided by the outside world to the national economy, to acquire financial and other assets abroad, and so on.
The price of a currency in exchange transactions is its nominal exchange rate, i.e. the price of a unit of the national currency, expressed in the amount of foreign currency.
For example, the exchange rate of the ruble against the dollar is the number of dollars that can be exchanged for one ruble, against the euro - the corresponding amount of euros, etc. Since there are usually several currencies on the territory of the country, it is convenient to determine the weighted average exchange rate of the national currency in relation to the "basket" of foreign currencies, taking into account the share of settlements in the corresponding currency in the country's foreign trade operations. In this case, one speaks of the "effective" exchange rate of the national currency.
The model of the circulation of income and products in the economy. Model of circular flows.
As an independent branch of economic science, macroeconomics was formed in the 30s of the XX century. Macroeconomics- a section of economic science that studies the economy of the regional, national and world levels (in order to ensure conditions for sustainable economic growth, full employment of resources and minimization of inflation).
The subject of study of macroeconomics- the behavior of the economy of regions, the state, the system of their internal and external economic relations, considered as a whole.
- national product
- employment (unemployment)
- inflation
- the economic growth
- business cycle
- macroeconomic policy of the state
- external interaction of national economies
Macroeconomics operates with aggregated indicators.
Aggregation– convolution of real factors into an averaged (total) abstract factor. In macroeconomics, four aggregated subjects are considered:
1. household sector independently makes decisions, is the owner of the factors of production, the goal is to maximize the satisfaction of their needs within the available resources. All consumers, employees, owners of capital belong to households. Households receive income from the sale or rental of factors of production that they own, and direct them to current consumption or savings.
2. business sector- all enterprises of the country are economic units, independently make decisions, use factors of production for the production and sale of goods, the goal is to maximize profits. Enterprises invest in expanding and maintaining production.
3. government sector- state organizations and institutions that have political and legal power to control entities and markets in general in order to achieve public goals. The state produces public goods by purchasing from entrepreneurs and by hiring households by collecting taxes from them. In addition, one of the functions of the state is the supply of money.
4. foreign sector all foreign economic entities and government institutions. They interact with the economic entities of a given country by exchanging goods, services, national currencies, etc.
And 4 aggregated markets: the goods market, the labor market, the money market, and the capital market.
Models– formalized simplified descriptions of real economic phenomena and processes.
The models use exogenous (preset, known) and endogenous (unknown) quantities, stock variables, flow variables, relative variables.
endogenous variables– are determined as a result of using models.
exogenous variables- are the initial data in the models used.
Stock variables- can be measured at a certain point in time (wealth, money, savings, public debt).
Thread Variables– are measured in time (income, expenditure, savings, state budget deficit).
Relative Variables- express the relationship between the stock and flow variables (average propensity to consume, capital-labor ratio, capital productivity).
open economy- an economy that participates in relations with foreign countries, that is, it has the export and import of goods and services, capital, labor, information, technologies.
Goods Market- combines the demand and supply of goods and services that are produced in a certain period (during 1 year) or the supply and demand of GDP. The supply of goods is formed by entrepreneurs and abroad, and the demand is for households, government, enterprises, and abroad. Equilibrium GDP depends on the general price level in the country.
capital market- covers the totality of relationships that bring % on capital. The demand for capital is in the form of enterprises, and the supply is dom.khoz. The rate of % is a homogeneous value.
money market- involves the interaction of supply and demand for money. The supply of money is formed by the banking system, and the demand depends on the interest rate on capital in the country.
Labor market- represents the main sector of production - labor force. The homogeneous demand and supply of labor in the country interact in the market, depending on the average wage rate. Disequilibrium in the labor market is a phenomenon of unemployment.
2. System of national accounts. Residents and non-residents. GNP and GDP. Four ways to calculate GDP.
System of National Accounts is a set of common economic terms, systems, indicators and accounting rules used at the national (state) and international levels for compiling macroeconomic reporting. The SNA is used to analyze the current macroeconomic situation and to substantiate forecasts, to compare performance and the state of the economies of various countries of the world; to implement a certain economic strategy. The main indicators of the SNA are GNP, NNP, ND, LD, general price level, economic growth rate, inflation and employment, budget indicator, balance of payments.
On the scale of the national economy, all economic agents are either residents or non-residents. Residents- these are economic agents permanently located on the territory of a given country, regardless of their citizenship or capital ownership. Non-residents- these are economic agents permanently located on the territory of a foreign state, even if they are citizens of this country.
GNP (gross national product)- the total market value of goods and services produced by residents during a certain period. GNP only includes final goods and services.
GDP (gross domestic product)- the total market value of goods and services produced in the territory of the state. Only final goods and services are taken into account in the calculation of GDP.
Final product- finished goods and services consumed by the population, and not intended for the production of other blessings.
Intermediate- goods and services directed to the current mat. Zat-you for the pro-va of other benefits.
Cumulative total product- the total market price of final and intermediate goods and services.
Four ways to calculate GNP:
1. Measuring GNP by spending: is the main macroeconomic identity, where is net export
2. Measurement of GNP by leaks and infusions.
Savings equals the difference between income and consumption (S=Y-C). On the other hand, private savings equals the sum of household and business sector savings (). Thus, private sector savings are equal to income () minus consumption C: , where are net taxes. Government savings: 
.
Savings of the sector abroad: 
. Total savings: .
Considering that the private sector uses its income (Y), receiving transfers and paying taxes (), creating savings (S) and consuming (C): Y=C+S+T. Using the basic macroeconomic identity, we get: or . Here, the left side of the equation is leakage (the diversion of potential spending from income), and the right side is injection (any addition to consumer spending on domestically produced products). The economy is in equilibrium if leakages equal injections.
3. Measuring GNP by income: 
,
where is net factor income (the difference between income from the use of factors of production located abroad, which are owned by residents, and payments to non-residents for the use of factors of production owned by them in a given country). The full formula for GNP by income is:
The macroeconomic approach to the study of economic processes has a number of features:
It is aimed at studying the principles of formation of aggregate indicators that characterize the level or trends in the development of the economy as a whole (national income, total employment and investment, price level). The main subjects of the economy (producers and consumers) are also considered as aggregated aggregates;
Unlike microeconomic analysis, in which the decisions of firms and consumers and their actions in individual markets were considered independent, macroeconomics considers the interactions between actors through a system of interconnected markets;
The number of economic entities that determine the state and development of the economy (firms, households, the state, as well as subjects of other countries) is expanding.
Macroeconomics uses aggregated parameters. In the analysis, 4 economic entities are distinguished:
1. Household sector. Includes all private economic cells within the country, whose activities are aimed at satisfying their own needs. All factors of production are owned by households. Through their sale or rental, households receive income, which they distribute between current consumption and savings. Consequently, they exhibit 3 types of economic activity: they offer factors of production, they consume part of the income they receive by buying consumer goods, and they save the other part.
2. The business sector is the totality of all firms operating within the country. There are 3 types of economic activity: the demand for factors of production, the supply of goods and the implementation of capital investments (investment).
3. Public sector - all government institutions and institutions. The state is engaged in the production of public goods - national security, the achievements of fundamental science, the services of the state social and industrial infrastructure.
For the production of public goods, the state purchases the means of production from firms. These costs, together with the cost of paying civil servants, are called government spending. They are covered by taxes levied on households and entrepreneurs. State spending includes payments to households (pensions and benefits) and entrepreneurs (subsidies and subventions). They are considered as negative taxes.
One of the most important functions of the state is the creation (offer) of money.
Thus, the economic activity of the state is manifested in spending the state budget, levying taxes and offering money.
4. The rest of the world includes all economic entities that have a permanent location outside the country, as well as foreign government institutions. The impact of foreign countries on the domestic economy occurs through the mutual exchange of goods, capital and national currencies.
Each of these macroeconomic entities interacts with others through lending and borrowing.
In macroeconomic analysis, not only subjects are aggregated, but also their behavior in economic life. At the same time, the national economy has the property of emergence: the consequences of the activity of a macroeconomic entity may not coincide with the consequences of the same activity of microeconomic entities united in a macroeconomic aggregate. For example, if during a depression a firm refrains from real investment, then this contributes to the preservation of its capital. But if all firms do this, then the total capital and the capital of each firm will depreciate.
Macroeconomic aggregation extends to markets as well. Of the many markets, Keynes identified 4 main ones:
1. The market for goods. The sellers are firms, the buyers are households, firms and the state. The microeconomic concept of price disappears, the absolute price level and its change become the subject of study.
2. Money market. The seller is the state, the buyer is firms, households and the state.
3. Labor market. Seller - households, buyers - all subjects.
4. Capital market (securities). The seller is firms and the state, buyers are all subjects.
The goods market and the labor market form real sector economy, and the money and securities market - its monetary sector .
These markets are complemented by macroeconomic linkages:
Firms and households pay taxes to the state;
The state provides subsidies to firms and transfer payments to households;
Firms turn part of their profits into investments (future supply), while households save part of their income (future demand);
The state uses part of the budget to finance non-market sectors of the economy (science, education, defense, healthcare, industrial and social infrastructure);
The state enters into credit relations with foreign countries.
Macroeconomic relationships can be represented in the form of a diagram (Fig. 1.1).
Macroeconomics uses widely different models.
Macroeconomic Models are formalized (logically, graphically and algebraically) descriptions of various economic phenomena and processes in order to identify functional relationships between them.
Any model is a simplified, abstract reflection of reality. With the help of models, a set of alternative ways to manage the dynamics of employment levels, output, inflation, investment, consumption, interest rates, exchange rates, etc. is determined. internal (endogenous) economic variables, the probabilistic values of which are established as a result of solving the model.
As external (exogenous) variables, the value of which is determined outside the model, often act as the main instruments of the fiscal policy of the government and the monetary policy of the Central Bank - changes in the values of government spending, taxes and money supply.
With the help of models, the multivariance of methods for solving economic problems is provided, which makes it possible to achieve the necessary alternativeness and flexibility of macroeconomic policy.
Fig.1.1. Scheme of interactions between macroeconomic entities
1 - supply of goods, 2 - demand for household goods, 3 - demand for investments, 4 - demand for state goods, 5 - exports, 6 - imports, 7 - labor supply, 8 - demand for labor, 9 - demand for money, 10 - supply of money, 11 - supply of securities, 12 - demand for securities, 13 - taxes.
Aggregation as a method of macroeconomics. Features of measuring aggregated indicators
Macroeconomics is one of the branches of economic theory. In macroeconomics, the economy of the country as a whole is studied, and therefore, in contrast to microeconomics, the so-called aggregate parameters are used in it.
Aggregation is called the union, the summation of any homogeneous indicators (values) in order to obtain generalizing indicators.
Economic entities - households, firms, the state and abroad - are subject to aggregation. Each of them is a set of real economic entities with a special role in the national economy (this issue was discussed in topic 1.1).
In macroeconomics, aggregated markets are also analyzed - the goods market, the labor market, the money market and the capital market (securities market).
Instead of supply and demand in the markets of individual goods, macroeconomics studies aggregate demand and aggregate supply, instead of prices for individual goods and services, the subject of study is general price level.
Microeconomics analyzes the level of wages and employment in the markets of certain types of labor. In macroeconomic analysis, it is assumed that only one type of labor is offered in the labor market. Therefore, indicators of the state of the aggregated labor market are the general wages and overall employment.
With this in mind, the tasks of macroeconomics are: to determine the conditions for achieving a general equilibrium in the economy, for its sustainable growth, to ensure full employment of resources and reduce inflation. Many of these conditions depend on the activities of the state to regulate the market economy. Therefore, in macroeconomics, the economic policy of the state is also studied.
Macroeconomic indicators affect the interests of all categories of the population of any country. Thus, the current incomes of all segments of the population depend on the size of the national income of the country and the level of employment. The level of consumption of citizens receiving fixed incomes, the value of family property depend on the level and rate of inflation. The degree of freedom of movement of its inhabitants across state borders, etc., depends on the state of the country's balance of payments.
Macroeconomic issues are the subject of political debate in the legislature. Candidates for president and parliament in their programs focus on macroeconomic problems: inflation, unemployment, economic growth, and so on.
On the most important macroeconomic problems, there is a wide variety of views, approaches to their solution, the spokesmen for which are united in competing scientific schools and directions. In macroeconomics, macroeconomic models of representatives of leading economic schools are considered.
Within the framework of macroeconomic analysis, national accounting and macroeconomics in the proper sense of the word are singled out.
National Accounting- this is an analysis of the country's economy over the past period of time using statistical indicators that characterize its dynamics. The results of this analysis serve as the basis for determining the degree of implementation of the planned goals, for a comparative analysis of the country's economic potentials in different periods and the potentials of different countries.
Macroeconomics in its own right it is predictive modeling of macroeconomic processes based on certain theoretical concepts. The purpose of macroeconomic analysis is to determine the patterns of formation of macroeconomic parameters.
The results of the functioning of the national economy as a whole are measured by the totality of final goods and services produced in it over a certain period of time. For their measurement, aggregated (generalizing) indicators are used.
Since different types of products and services have different consumer purposes and their volumes are measured in different physical units (tons, meters, kilowatt-hours, etc.), it is impossible to summarize their volumes measured in this way. Tons of wheat, for example, cannot be combined with meters of cloth. Tons of wheat cannot be combined with tons of meat, and so on. To measure and compare generalizing indicators, it is necessary that the summarized parameters be measured by a single measure. Such a universal measure is prices goods and services. The values of generalizing indicators characterizing the results of the functioning of the national economy for a certain period of time are measured by summation market prices produced goods and services. But this method of measurement causes some problems.
First problem due to the fact that the weight of the produced products are divided into intermediate and final.
Final products are those that are ready for direct consumption (cars, household appliances, ready-made clothes, shoes, etc.), and are not subject to processing or resale.
Intermediates- these are those that are involved in the production of final products, are purchased for further processing or resale. Therefore, their prices are included in the prices of final products.
Example: The farmer sold grain to the flour mill for the amount of 1 million rubles. The milling enterprise, having processed grain into flour, sold it to a bakery for 2 million rubles. The bakery produced bakery products from flour and sold them to the population in the amount of 3 million rubles. If the value of the total volume of production of grain, flour and bakery products is judged by the sum of their prices, then it turns out that the value of 6 million rubles has been created in the economy. (1+2+3). However, it is not. In this amount, the price of grain is taken into account thrice- as the price of the grain itself, as part of the price of flour and bakery products. Flour price included two honeys in the price of flour itself and in the price of bakery products.
In this regard, when measuring the value of generalizing indicators, the problem of excluding re-registration prices of intermediate products. The complexity of solving this problem is due to the fact that some products in some cases are intermediate, in others they are final. Flour purchased by the bakery is an intermediate product, flour purchased by households is the final product. To overcome this difficulty, when solving the problem of excluding repeated consideration of the prices of intermediate products when measuring generalizing indicators, it is necessary to summarize only part of the prices of all products- both final and intermediate, namely, only the part that is added to the cost of intermediate products by each manufacturer in the process of producing their products, or the so-called added value (cost).
Added value (value)- this is the part of the price of all products (both intermediate and final) minus the cost of materials, raw materials, and other resources purchased for the production of products, or it is the cost of work performed through the labor and capital (equipment) of producers in the processing of raw materials and materials. In our example, the amount of added value is equal to: 1 million rubles. (grain price) plus 1 million rubles. (value added in the production of flour) plus 1 million rubles. (value added in the production of bakery products). Therefore, it is more correct to assume that the total value created in the economy is 3 million rubles. Value added includes the cost of labor (wages), the cost of replacing the depreciation of fixed capital (depreciation), and the cost of remuneration for entrepreneurial ability (profit).
The sum of the added values is equal to the sum of the prices of the final products.
Second problem, due to the measurement of generalizing indicators by summing up the prices of goods and services, is that in connection with a change in the general price level, it becomes necessary to adjust the nominal value of generalizing indicators - the value measured in prices of the current period.
The values of generalizing indicators can change for two reasons:
change physical volume production of goods and services (the number of physical units of each type of product and service);
change prices goods and services.
The physical volumes of production of different types of products may not change, but if their prices change, then the values of generalizing indicators will also change. But in this case, it will be impossible to judge the dynamics of the national economy by these changes.
In this regard, distinguish nominal and real the value of generalizing indicators.
Indicators measured at the prices of the current period, called nominal.
Indicators measured in the prices of the base period, called real.
The base year is the year taken as a reference point when comparing generalizing indicators. Any year can be taken as the base year. In the base year, the price level is taken as a unit or as 100%. The state and dynamics of the national economy can only be judged by changes in real indicators. Therefore, there is a need correct nominal value generalizing indicators to obtain them real size. How this is done will be shown later in the topic “Macroeconomic instability”.
The main specific research methods in macroeconomics are: aggregation and modeling.
Aggregation- consolidation of economic indicators by combining them into a single general indicator (creation of aggregates, aggregate values).
Aggregate values characterize the development of the economy as a whole: gross product (rather than the output of an individual firm), general price level (rather than prices for specific goods), market interest rate (rather than individual types of interest), inflation rate, employment rate, unemployment rate etc.
Macroeconomic aggregation extends to economic entities and markets. At the macro level, four sectors of the economy are distinguished: the household sector, the business sector, the public sector, and the foreign sector.
The household sector is the main consumer of market products and the owner of production factors. It forms the supply of labor and the demand for goods. In return, he receives income, part of which he consumes, and part of which he saves.
The business sector supplies products to the market for goods. It makes demand for factors of production and makes investment.
The public sector produces public goods, levies taxes, pays transfers, forms the money supply and creates conditions for the optimal functioning of the national economy.
The foreign sector is a collection of economic entities abroad and foreign government institutions. Used to determine the state of the national balance of payments.
Modeling is a description of economic processes or phenomena in a formalized language using mathematical symbols and algorithms in order to identify functional dependencies between them. The modeling process includes the following steps:
1. Statement of the subject and purpose of the study.
2. Allocation in the given economic system of economic objects of interest. The study of the object, in particular, how it functions, what factors influence its functioning, what are the criteria for its optimization.
3. Identification of the most important characteristics of each studied economic object. Description of the relationship between them.
4. Mathematical modeling. Translation of the descriptive model into a formal mathematical language.
5. Choosing a solution method and obtaining it.
6. Solution analysis. Check for compliance with a real object.
Any economic and mathematical model is abstract, has a number of assumptions and simplifications, which limits its scope. At the same time, it is on the basis of economic and mathematical modeling that one can get a fairly complete picture of the nature of the processes taking place in the economy, determine the patterns of functioning of an economic object, make a forecast for the development of the economy, and substantiate recommendations on economic policy. In macroeconomics, many economic and mathematical models are used, which can be classified according to various criteria:
According to the degree of generalization - abstract-theoretical and concrete-economic;
According to the duration of the analyzed processes - short-term and long-term. Short-term models assume that the prices of some goods are not flexible and do not adjust to changes in demand. In long-term models, prices are flexible and responsive to changes in supply and demand;
By the nature of the interconnections of elements - linear and non-linear.
By the degree of coverage of the foreign sector - closed (only the national economy is represented) and open (taking into account the impact of the foreign sector on the national economy);
Taking into account the time factor - static and dynamic. In static models, all economic indicators are tied to a certain point in time. In dynamic models, the temporal relationship of economic indicators is considered. They involve taking into account such problems as the problem of involving resources, the problem of accumulation, the problem of implementing the achievements of scientific and technical progress, the time factor, the problem of cost alternatives.
Any model can be represented algebraically, graphically, in the form of accounting records and in tabular-matrix form. The most commonly used are algebraic and graphical forms of models.
Economic variables, the value of which is set before the model is built, are taken as exogenous (external). The macroeconomic model makes it possible to determine the endogenous (internal) economic variables, the value of which is set in the process of solving the set task. The task of macroeconomics is to explain the development of endogenous variables in the presence of exogenous ones.
Usually, government spending, the tax rate, and the money supply are exogenous parameters in macroeconomic models. Among the endogenously determined parameters are the volumes of employment and output, the levels of inflation and unemployment, and so on.
Functional dependencies between exogenous and endogenous quantities are of the following types:
Behavioral, which reflect the preferences of economic entities. An example of this kind of dependence can serve as a function of consumption or investment demand;
Technological, show technological dependencies in the economy. An example would be a production function showing the relationship between volume and factors of production;
Definitional, reflect the content of phenomena and their structure. For example, definitions of aggregate demand, unemployment, inflation;
Institutional, express dependencies arising from norms and rules institutionally established in the economy. These include the function of tax revenues as a function of the amount of income and the established tax rate.
Flows of resources and stocks. Along with the classification of economic variables into endogenous and exogenous, macroeconomics also uses another grouping related to the way they are measured over time: stock variables and flow variables.
The difference between flow variables and stock variables is that the former reflect the transfer of values by entities to each other in the course of economic activity,
the second - the accumulation and use of values by subjects. Flow variables are measured per unit of time, usually per month, per quarter, per year. Stock variables can only be measured at a specific point in time, such as at the beginning or end of the year. Thus, investments are flow quantities, and the capital accumulated as a result is a reserve. The budget deficit is a flow value, and the public debt is a stock.
There is a relationship between stocks and flows in an economy: flows cause changes in stocks. However, under certain circumstances, stocks and flows can change independently of each other.
Ticket number 3 The concept of aggregation. macroeconomic agents. Macroeconomic Markets
Aggregation
Macroeconomics operates with aggregates and deals only with aggregates such as gross national product, national income, price levels, inflation and unemployment, consumption, savings and investment, the market rate of interest, etc.
In macroeconomics, only four subjects are distinguished: households, firms (the business sector), the state and abroad (foreign sector). Each of the macroeconomic entities is a set of real actors of this type. At the same time, each of them is a typical representative of economic entities of this type. This means that for the purposes of macroeconomic analysis, only those features of the behavior of the subject that are inherent in absolutely each of them are selected, that is, the nature of their behavior is also subject to aggregation1.
Allocation as an independent subject of the state makes macroeconomics fundamentally different from other sections of economic theory. If the general economic theory analyzes the principles of the functioning of state institutions, then macroeconomics examines the role of the state in the process of forming the conditions for macroeconomic equilibrium.
Macroeconomics does not study the characteristics of the production of individual goods or private decisions of consumer choice, does not deal with the sectoral structure of production or the formation of prices for goods and services. In macroeconomics, aggregated markets are considered. At the same time, the entire set of microeconomic markets is grouped into the following types:
The market of goods and services (real goods). In the market of goods, all individual differences in the microeconomic markets for goods and services disappear, and the questions of establishing the magnitude of aggregate demand and aggregate supply, the general price level and conditions for the formation of equilibrium remain to be studied.
The real capital market, represented by the investment goods market.
The labor market, in which the object of sale and purchase is labor as such, without distinguishing its individual types.
The money market, while money means only the national currency.
The capital (securities) market, the main purpose of which is to ensure the transformation of savings into investments.
International market represented by the foreign sector (abroad). In the analysis of an open economy, the international market is divided into the market for goods and services, the market for assets and the foreign exchange market.
The market for goods and the market for real capital together form the market for real assets. Together with the labor market, they constitute the real sector of the economy.
The money market and the capital market are components of the financial market, in which the distribution of funds between economic entities takes place.
Macroeconomic agents
In macroeconomics, four economic agents are considered:
Households - are the owners of economic resources (factors of production), the main consumers of goods and services. As income, they receive wages for the use of labor by firms: the main resource produced by households. They pay taxes to the state and receive the necessary transfers from it, such as pensions, unemployment benefits, student scholarships, and others.
Firms are the main producers of goods and services, the main goal is to maximize their own profits. They are the main borrowers in the securities market. Firms make a profit from investments in goods and services. The main expenses of firms are taxes, investment costs and payments to households for resources.
Households and firms form the private sector of the economy.
The state is the main producer of public goods, the main goals are: the redistribution of national income, the regulation of the economic activity of other agents and markets. Receives taxes - its main source of income, pays transfers to households and subsidies to firms, if necessary, makes purchases in the goods market. The state is inextricably in contact with the financial market.
The private sector and the state form a closed economy.
The foreign sector is international trade, the circulation of capital and securities.
All four macroeconomic agents form an open economy.
Macroeconomic Markets
Market for factors of production
Economic resources (or factors of production) are considered to be land, labor (labor market), physical and financial capital. Some economists also add human capital to this list: people's abilities, talents, to increase productivity.
Market of goods and services
It is in this market that the formation of aggregate supply and demand takes place. At the same time, the demand for goods is presented by all macroeconomic agents, while the supply is created by firms, the main producers of goods and services. Since real value is exchanged in this market, it is also called the real market.
Financial market
Main article: Financial market
The financial market consists of:
The money market, where the formation of supply and demand for money takes place, the study of the equilibrium interest rate and money supply
Securities market: the market for financial assets such as stocks and bonds
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