Exchange rates can be understood as the price of one currency in terms of another currency. However, just like for goods and services, we must take into account what determines that price, since governments can influence it, and even fix it. Exchange rate regimes (or systems) are the frame…
Inflation and unemployment can be very harmful to the economy, and so governments will always try to control them by implementing economic policies. However, knowing how a problem originates is always helpful when trying to fix it. This is the reason why economists have created an incredible amount of…
There is a relationship between inflation and unemployment that can be easily analysed. Governments around the world take this relationship very seriously, since there will always be a trade-off when implementing economic policies aiming either at reducing unemployment or keeping inflation at bay. Even though this relationship was first…
Inflation and unemployment are probably, along with GDP, two of the most used economic indicators of how well a country is doing. Inflation measures increases in the price levels, which can hurt the economy in multiple ways when not under control. Unemployment measures the percentage of people in a…
Nowadays, pretty much every country in the world is considered to be an open economy. This means that the country will trade with the rest of the world, these exchanges being measured in terms of net exports. When analysing open economies, it is important to understand a few things…
When we study macroeconomics, the easiest and first approach is to analyse closed economies. These are defined as countries that are self-sufficient and autartik, meaning they do not trade with other countries, and rely only on what they produce. There is a widely used analogy by Economics professors: Robinson…
Economists study macroeconomics as a way to understand how the world works, and how to analyse any country’s economy . In other words, in contrast to microeconomics, which analyses a consumer or a firm’s economy, macroeconomics analyses the economy as a whole. Therefore, to understand how the economy of…