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Macroeconomics Basics

Macroeconomic forces affect all of us in our daily lives. Inflation rates influence the prices we pay for goods and services and, in turn, the value of our incomes and our savings. Interest rates determine the cost of borrowing and the yield on bank accounts and bonds, while exchange rates affect our command over foreign products as well as the value of our foreign assets. And all of this represents just the tip of the iceberg. Numerous macro variables—ranging from unemployment to productivity—are equally important in shaping the economic environment in which we live.