Q:

What are macroeconomic factors?

A:

Quick Answer

Macroeconomic factors are events or situations that affect the economy on a broader level, influencing the economic outcome of large groups of people on a national or regional level. Some macroeconomic factors include unemployment, savings, inflation and investments.

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Full Answer

Typical macroeconomic factors affecting the economy at a national or regional level include:

  • On a national level, macroeconomic output is a country's gross domestic product, or GDP. This includes everything the country produces and sells to generate income. When a country's output does not consistently grow, it may enter a recession.
  • The amount of unemployment in a country, excluding those who are unable to work because of illness, retirement or being discouraged from the workforce. This may occur when wages are too high for employers to take on more staff, or because there is not enough demand for goods and services in particular sectors.
  • Inflation and deflation occur when there is instability in the market. When the economy grows too quickly, prices may inflate, making it difficult for consumers to purchase goods. Similarly, if it declines rapidly, prices can deflate, making it hard for businesses to make money.
  • Production costs can influence the price of products and services, which in turn impacts whether households can afford them.
  • Public policies may also act as macroeconomic factors. This includes environmental policies that incur business costs and business tax.
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