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When looking at the economy, you might look at it in one of two different ways. In one, you look at how individuals act, figuring out how their specific interests fuel decision-making. In the other, you look at the economy as a whole and see how different fluctuations affect everyone involved. If you were thinking of things in terms of Game of Thrones, microeconomics is concerned with Daenerys and how her army of Dothraki and Unsullied measure up, while macroeconomics is looking at the entire army of the living, Cersei included. If you are looking at the big picture instead of the individual parts, private macroeconomics tutors might be right for you.
We look at macro from a wider lens to focus on the welfare of the economy as a whole, making sure that one or two individuals do not become powerful enough to dictate things on their own. One might look at the difference between micro and macroeconomics as the reason that we need antitrust laws that prevent monopolies from forming. The reason that we need to make sure that there are no monopolies is that competition in the market helps keep things stable. If one company is able to take control, everything can get thrown out of whack, potentially allowing companies to set egregious prices.
A great use for macroeconomics is in the political sphere, where policy change can help drive the economy. Following the recent recession, our economy has slowly recovered thanks to the moves of the government. Unemployment is one of the major focuses of macroeconomics. We look at several different types of unemployment, as there are different causes for each and the solutions are varied. Frictional unemployment results from imperfect information and difficulties matching qualified workers with jobs. This is the most common form of unemployment and one that is seen as unavoidable. Private companies like Indeed and ZipRecruiter have made the matching process simpler, but there will always be imperfect information. Cyclical unemployment is the result of the business cycle. Recessions are a natural part of the business cycle, but a pronounced or prolonged recession can have deep effects on the unemployment rate.
Structural unemployment is the final type and this is where most of the discussions are heading, especially in the political space. This is where workers are no longer qualified for the jobs that are available, often meaning workers are without jobs for a long stretch of time and some require retraining. For example, we currently have a large need for drivers of all kinds. Truck drivers have always transported goods across the country and taxi drivers have always transported people. With the introduction of Uber and Lyft, there are more people hiring rides than ever before. Yet, Uber, Tesla, and Google are all working on self-driving cars in one form or another. If this becomes a reality, all of those truck and taxi driving jobs will become obsolete and finding a new field where those skills are transferable is going to be next to impossible. That puts the onus of finding a new job on the unemployed people. This could have horrifying effects, as it might mean more unemployment payments and a burden on society by having so many people out of work.
We need to have people looking at the economy in lots of different ways, which is why we need as many macroeconomists as we need microeconomists. To study the whole, search for macroeconomics tutors near me.
Beyond the places where politicians argue about the economy, central banks also play a large role. The government control over the economy is referred to as fiscal policy, where the central banks’ influence comes through monetary policy. These banks attempt to control the supply of money in circulation by various means. By buying bonds, central banks are able to add more money into circulation and lower interest rates. In the reverse, selling bonds takes money out of circulation, lowering the supply. Central banks are constantly shifting the money supply to maintain a targeted, ideal fixed interest rate or to target inflation rates. These are things we want private macroeconomics tutoring to help you understand more about.
The thing about the difference between monetary and fiscal policy is that one of them is involved with the political sphere, so there is an obvious opportunity for bias. Politicians should be driven by the beliefs of their constituents, but that does not always happen as hoped. The influence of special interest groups in our political system means that some policy is colored by the needs of individuals, rather than representing the common good. This is obviously inefficient, as the needs of a few do not ever match the needs of the many. The other inefficiency of fiscal policy is time. One of the worst parts of politics is the fact that it takes so much time to enact any sort of policy, let alone get it through the necessary voting channels. Central banks are able to make decisions about monetary policy quickly and implement them just as fast.
Much of macroeconomics can be boiled down to the formula MV=PQ. In this, money velocity times the money supply is equal to the quantity of goods produced times change in the price level. In the typical view, velocity and quantity are constants, so money supply and price level are directly related. This theory assumes that increases in price on the aggregate will lead to a higher value of money in the economy. Using this equation, we can see how unemployment and inflation are directly related as well. That relationship between money supply and the price level is a quantitative look at the reasons behind inflation. Meanwhile, unemployment is represented by the rate of change of P in relation to Q. When the quantity of goods produced increases faster than the price level, there is likely slack in employment.
In looking for macroeconomics tutoring near me, you want someone that is going to understand the market from the outside looking in. If they have a good grasp of the equations, the relationship between inflation and unemployment, and an understanding of how monetary and fiscal policy are used to shape the economy, they might make a great tutor.
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