The theories developed at different times. This means that they base on continued study of macroeconomics over time. Although none explains all the macroeconomics complications comprehensively, each of the theories addresses a portion of the delicate and complicated field. As an economist, the view of the macroeconomic environment is well presented to aid in the investment decision. In the modern world, governments have adopted a comprehensive guideline called dynamic and stochastic general equilibrium or new classical synthesis. As an investment economist, such a macroeconomic environment will be favourable in effective risk evaluation and management. This is because the environment reduces abrupt changes. In addition, the government has placed measures that enable the economy to absorb shocks when such changes occur.
Macroeconomics has developed in favour of informed investment decisions. Aggregate demand and aggregate supply curve are a method adopted in the modern macroeconomic understanding. This model seeks to explain various economic forces and their effect on investments. The slope is caused by the real balance effect and interest rate effect. Real effect argues that when the real prices fall, real wealth increases resulting in consumers demanding more products than before the fall in prices. On the other hand, the interest effect stipulates that when the prices fall, the demand for money lowers, leading to a reduction in the interest rate. This effect encourages the borrowing of money to invest, resulting in increased consumption. The A.D-A.S curve is also useful in explaining other economic phenomenal.
IS and lM is another useful tool in the modern investment decision-making process. The simulation seeks to obtain the equilibrium in rates of interest and output where the saddle point of products and money exchange is available. The IS curve consists of investment points equal to savings, provided the output is known. The relationship between the two curves is an inverse relation. The model also aids in monitoring the effect of monetary and fiscal policies. The understanding of development in the macro-economic environment, which is further enhanced by the above two models, improves the choice of investments. Currently, the global economy is recovering from the recent global economic crisis. This means that the future prospect is high, and the return on investment in the future will improve drastically once the economy recovers.