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Macro Economic Variable & Stock Return

In: Business and Management

Submitted By YogitaBabel
Words 4182
Pages 17
INTRODUCTION

Macroeconomic Variables

Macroeconomics is a branch of economics dealing with the performance, structure, behaviour, and decision-making of an economy as a whole, rather than individual markets. This includes national, regional, and global economies.

Macroeconomic is a factor that is pertinent to a broad economy at the regional or national level and affects a large population rather than a few select individuals. Macroeconomic factors are key indicators of economic performance and are closely monitored by governments, businesses and consumers.

Macroeconomic factors are the factors which affect the wider economy. In other words these factors seem to summarize the picture of economy.

Macroeconomic variables include economic output, unemployment, inflation, interest rates, money supply, exchange rate, foreign reserves, savings and investment.

Variables used in study:

• Consumer Price Index (CPI)

Inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account within the economy. A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the CPI) over time.
A consumer price index (CPI) measures changes in the price level of consumer goods and services purchased by households. It captures the retail price movement for different sections of consumers.
In India, the Consumer Price Index or CPI measures changes in the prices paid by consumers for a basket of goods and services.

It is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as

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