What is Macroeconomics?
, What is Macroeconomics?
• Macroeconomics is the study of the
economy as a whole
• It looks at incomes, production, and prices in
the aggregate rather than for particular
individuals, firms, markets, or industries
• There are trends and fluctuations in total
economic activity that we want to explain
,Key Macroeconomic Questions
• Why do economies typically grow? And
why do some do better than others?
• Why do economies go through “booms”
and “busts” or even financial crises?
• Why is there always unemployment? Why
does it vary across time and countries?
• Can governments stabilise the economy?
How to set economic policies such as
taxes, public spending, and interest rates?
, Why Is Macro Different From Micro?
• In Micro: Analysing the specifics of
individual markets in detail is important
• In Macro: Sheer size of the economy
means we must “zoom out” to see the “big
picture”
• Interdependency of different parts of the
economy is more important in macro
• One person’s spending is another person’s
income; one person’s borrowing is another
person’s saving
, What is Macroeconomics?
• Macroeconomics is the study of the
economy as a whole
• It looks at incomes, production, and prices in
the aggregate rather than for particular
individuals, firms, markets, or industries
• There are trends and fluctuations in total
economic activity that we want to explain
,Key Macroeconomic Questions
• Why do economies typically grow? And
why do some do better than others?
• Why do economies go through “booms”
and “busts” or even financial crises?
• Why is there always unemployment? Why
does it vary across time and countries?
• Can governments stabilise the economy?
How to set economic policies such as
taxes, public spending, and interest rates?
, Why Is Macro Different From Micro?
• In Micro: Analysing the specifics of
individual markets in detail is important
• In Macro: Sheer size of the economy
means we must “zoom out” to see the “big
picture”
• Interdependency of different parts of the
economy is more important in macro
• One person’s spending is another person’s
income; one person’s borrowing is another
person’s saving
