1)What are the advantages and disadvantages of macroeconomics to the least developed nations?

2)To what extent can all macroeconomic objectives of a country be achieved simultaneously in a country?

3)What are some of the macroeconomic variables that are factored into the analysis of forecasting the risk and default rates of commercial loans?

1)Advantages

Like in developed nations, macroeconomics in developing countries enhances policy formulation while acknowledging circumstances of the prevailing scenario. For instance, while addressing macroeconomic problems, the government monitors interest rate and tax-related decisions.

Macroeconomics enables governments to keep increasing employment levels on track and assists in the achievement of poverty elimination targets.

The economic decision-making process is executed without forgetting macro levels ailing the economy. For example, while making further trade-related decisions, macroeconomics enables the consideration of trade deficit.

Macroeconomic enhances monitoring of aggregate demand and supply of the economy, and establish whether production can balance supply.

Disadvantages

Third-world countries possess unique conditions that may render macroeconomic techniques obsolete. Macroeconomic problems can become significantly challenging to address in developing economies.

Macroeconomics can lead to reduced economic growth in developing countries. Characterized by extended duration of macroeconomic issues, including high levels of unemployment and inflation, developing nations may experience reduced economic growth. For instance, consistent inflation can lead to slow economic growth by reducing consumer buying power.

While focusing on macroeconomics, slow economic growth can be significantly complex to address in the least developed nations. Reduced government expenditure on public goods, such as law and order, education and healthcare can result in a collapse of output. However, while the government must increase taxation to raise expenditure, high tax leads to reduced public social spending, hence slow economic growth. Thus, macroeconomics can lead to economic stagnation in the least developed nations.

2)There are generally five macroeconomic objectives of a country that are low inflation, stable trade, efficient distribution of resources, low level of unemployment, and sustain the growth of the economy. These objectives may often conflict with each other. When one objective is achieved, it becomes a little difficult to achieve another objective. For example, when there is sustained economic growth aggregate demand increases, and the aggregate demand curve shifts rightward which increases the equilibrium level of prices and causes inflation. So, economic growth is followed by a high rate of inflation. When economic growth is achieved, the objective of a stable trade balance also becomes difficult to achieve. Therefore, it is difficult to obtain all the macroeconomics objectives.

3)

There are many macroeconomic variables which help to forecast the risk and default risk of commercial loans. Some of the factors which forecast risk and default rates are:

1.) Macroeconomic environment has a major effect on the quality of the commercial loan. Favorable macroeconomic environment reduce the risk of default repayment of loans. The share of nonperforming loan also decreases.

2.) The credit risk is also dependent on various macroeconomic factors. When there is drop off in the economy, the probability of default increases.

3.) When the GDP of the country increases, the probability of default decreases. As with the higher economic growth, people are more able to repay their loan and reduce nonperforming loans.

4.) When the economy expands profits earning of the country increases as during the period of economic expansion demand and supply for products increases.

5.) When economic growth is less, inflation rates and interest rtaes are high, there is stress in the banking system. These conditions may make people reluctant to repay the loan and increase the default risk of commercial loans.