Macroeconomics is important because it influences levels of supply and demand within the wider economy.<\/strong><\/p>\n\n\n\n As part of the course, you will have learned that economic factors are variables that can impact individuals, businesses and the overall economy. Some macroeconomic factors are decided by governments and central banks, such as tax rates, and fiscal and monetary policies<\/strong>. Other macroeconomic factors, which are not as heavily influenced by policy makers, include consumer spending and business confidence.<\/p>\n\n\n\n Four of the most important macroeconomic factors include:<\/p>\n\n\n\n You should also understand that markets tend to work in cycles, fluctuating between positive and negative periods of economic growth<\/strong>. Gross domestic product (GDP) is used to measure the market value of the goods and services produced by a country within a specific time period, and is the primary tool used to measure the current health of an economy.<\/p>\n\n\n\n Economic growth fluctuates between the following stages:<\/p>\n\n\n\n Different stock sectors will perform differently throughout the economic cycle.<\/strong> For example, defensive stocks, such as large blue-chip companies, have historically demonstrated a reduced response to broader economic changes. On the other hand, cyclical stocks have a proven correlation with the underlying economy, and tech stocks are highly sensitive to market and investor sentiment.<\/p>\n\n\n\n Finally, it is important to remember that macroeconomic characteristics will differ between different regions:<\/strong><\/p>\n\n\n\n Now that you have finished the macroeconomics course, consider revisiting any of the course materials, testing your knowledge or starting to invest on eToro!<\/p>\n\n\n\n\n\n GREAT JOB!<\/p>\n\n\n\n Test yourself on what you have learned<\/p>\n\n\n\nTake A Quiz!<\/a>\n<\/div>\n\n\n\n QUESTION 1<\/span><\/b> OUT OF <\/span><\/p>What are macroeconomic factors?<\/h2>\n\n\n\n
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How do markets work?<\/h2>\n\n\n\n
Expansion<\/th> Peak<\/th> Recession<\/th> Trough<\/th><\/tr><\/thead> Increased output by most economic sectors, which causes employment levels, consumer spending and business investment to grow.<\/td> Spending, investment and employment rates start to slow down, but remain positive. Inflation may accelerate.<\/td> GDP declines following lower spending, investment and employment levels.<\/td> GDP stops falling and starts growing, leading to renewed consumer and business confidence, which causes increased spending.<\/td><\/tr><\/tbody><\/table><\/div><\/div><\/figure>\n\n\n\n How do economic cycles impact stock sectors?<\/h2>\n\n\n\n
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<\/figure>\n\n\n\nRegional differences in macroeconomics<\/h2>\n\n\n\n
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