Macroeconomic variables are indicators of production and consumption volumes, income and expenses, activity, and efficiency of the global economical level. These are also indicators of the rank of the well-being of the population, exports and imports operations, the overall rate of economic growth, and other economic processes. Macroeconomic variables tend to reflect general trends in the economy, the following circumstances, and their current level.
The main indicator of the system of the macroeconomy is the gross domestic product (GDP). It characterizes the value of final goods and services produced by residents of the country for a certain period, minus the costs of intermediate consumption. GDP is measured at market costs for final consumption at prices paid by the buyer, including all trade and transport margins and taxes on products. During an economic crisis or a lack of internal resources, this indicator can rapidly fluctuate and decline. If GDP increases, it means that more goods and services are produced in the country, the income and tax deductions of which can be included in the country’s income (Dvorský et al., 2020). If the GDP declines, this indicates the beginning of an economic crisis that negatively affects both: the target and business.
Inflation is another economic indicator to track the level of a country. The process can begin for various reasons, including a shortage of goods on the market, monopoly of large firms, currency instability, and so on. Inflation has a huge impact on the economy and all types of financial instruments. Inflation is a steady rise in the general price level. However, this is the severe process of devaluation of paper money due to a violation of the laws of monetary circulation. Buyers have a limited ability to pay for purchases, and the business will suffer large losses from this. In addition, inflation also affects the purchase of raw materials, goods for sale, payment of employee salaries, and so on (Dvorský et al., 2020). The higher the inflation rate, the more unstable the market situation for businesses and customers.
Macroeconomic indicators are the central indicators of the economy, with the help of which it is possible to determine the state of the economy as a whole. Critical changes of any of the indicators can portend a sharp change in a situation on markets and with currencies. Therefore, leading economists, brokers, and traders are constantly monitoring the latest macroeconomic data to update the state and the relevant strategy.
Reference
Dvorský, J., Gavurová, B., Cepel, M., & Cervinka, M. (2020). Impact of selected economic factors on the business environment: The case of selected east European countries. Polish Journal of Management Studies, 22(2), 96–110. Web.