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Macroeconomics is a branch of economics that looks at the structure of the economy as a whole and how it functions. This can be contrasted to microeconomics, which looks at the economy in smaller pieces, such as how markets and individual firms function. Types of questions that macroeconomics studies is what makes an economy grow and why there is there a lack of development in some countries and not in others. Macroeconomics analyzes topics like economic growth, unemployment, inflation, and the effect of government economic policies.

An important part of macroeconomics is studying how the business cycle functions. The business cycle is the movement in economic activity and is measured by how real GDP (gross domestic product) moves, as well as other macroeconomic variables. The business cycle can be in a stage of contraction, which is the decrease in pace of economic activity; expansion, the increase in pace of activity; or in a peak of economic activity.

The aggregate demand and aggregate supply model is used to explain macroeconomics because it shows total price level and level of output. The aggregate supply curve shows the relationship between national price level and quantity of goods/services produced. The aggregate demand curve shows the quantity of goods and services produced domestically that are willing to be purchased by foreign consumers.

The study of macroeconomics is convergent to microeconomics and encompasses a variety of topics. It is an applied field and uses different economic models and indicators as a part of its study.

Categories within Macroeconomics

Income Distribution

Postings: 155

Income is most often earned through wages and is what an individual receives for their hours of labor or investments.


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Unemployment refers to the number of individuals who are unemployed and currently searching for work.

Aggregate Demand & Supply

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Aggregate demand (AD) is defined as the total demand for final goods and services in the economy (Y) at a given time and price level

General Equilibrium

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The macroeconomic equilibrium shows how real GDP and price level are determined by the interaction between aggregate demand and aggregate supply.


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Keynesian economics focuses on aggregate demand and how it impacts national output and inflation.

New Classical

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New classical economics builds on neoclassical ideas and strives to explain how fluctuations in employment and real wages are caused by technological changes and by willingness to work.

Price Levels

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The price level is the average level of all prices for goods and services in an economy and is expressed as an index number.

Balance of Payments

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The balance of payments (BOP) tracks the financial transactions made between the government, businesses, and consumers of a country with the rest of the world.

Expenditure Multipliers

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The expenditure multiplier is the measure of the change in aggregate production caused by changes in autonomous expenditure.

Business Cycles

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Business cycles refer to the rise and fall of economic growth that an economy experiences over a period of time.


Postings: 238

Banking refers to the monetary and financial activities that exist between the financial institution, the population, and the government.


Postings: 22

Economic globalization is the integration between economies around the world that is due to the increase in international trade, flow of international capital, and the growth of technology.

Cost of a Market Basket of Goods

1) during the course of a year, the labor force consists of the same 995 people of these, 17 lack skills that employers desire and hence remain unemployed throughout the year. All the same time , every month during the year, 38 different people become unemployed, and 38 other different people who were unemployed find jobs. The

Federal Budet and Federal Debt

Why does the budget require a forecast to the economy? Under what circumstances would actual government spending and tax revenue fail to match the budget as approved? Federal Debt what has happened to the federal debt since 2008 as measured relative to GDP? Fiscal Policy: In the current chapter, it shows that increase

Scarcity of Resources

What determines whether or not a resource is scarce? In economics, what is the significance of the concept scarcity?

Restructuring Sovereign Debt: Government Bonds

Suppose a country plans to restructure its sovereign debt by swapping its existing government bonds for bonds that have (i) half the face value, (ii) half the coupon rate, and (iii) double the remaining time to maturity. Assuming that the relevant opportunity cost remains the same, explain how each of these three measures would

Fear of Default and Bond Yields

Suppose investors believe the US will temporarily default on its debt payments in three months due to failing to agree to lifting the debt ceiling. What effect has this on the price and yield of US treasury bills and bonds with a maturity of 1 month, 3 month and 3 years and how does it affect the shape of the US yield curve.

Supply shocks and price stabilization

Both the long-run aggregate supply curve and the short-run aggregate supply curve shift in response to changes in the availability of labor or capital or to changes in technology and productivity. A widespread temporary change in the prices of factors of production, however, can cause a shift in the short-run aggregate supply cu

Monopoly profit

The market demand at the beginning is D1, and its corresponding marginal revenue is MR1. The initial ATC is ATC1, and the original supply is MC1. Therefore, the monopolist sells _____ units at $ _____ per unit, and his/her total profit is approximately $____________. After a given time period, due to investment and technologic

Cost Curves in Perfect Competition and Monopolistic Competition

C7 TQ3) The following graph (see attachment) shows the cost curves for a perfectly competitive firm. Identity the shutdown point, the breakeven point, and the firm's short-run supply curve. C7 TQ5) Draw graphs showing a perfectly competitive firm and industry in long-run equilibrium. (a) How do you know that the industry i

Economies of Scale: Cost Curves and Output

Industry studies often suggest that firms may have long-run average cost curves that show some output range over which there are economies of scale and a wide range of output over which long-run average cost is constant; finally, at very high output, there are diseconomies of scale. Draw a representative long-run ave

G in GDP component

3. Does the G in C + I + G + NX represent government spending (total government expenditures) or government purchase? How do government purchases and government spending differ? Does G include government investment? 4. Does the I in C + I + G + NX include purchases of stocks and bonds? Why or why not?

Demand and Supply for Wheat and Other Market Situations

3. How would each of the following affect the Canadian market supply curve for wheat? a. A new and improved crop rotation technique is discovered. b. The price of fertilizer falls. c. The government offers new tax breaks to farmers. d. The Prairies suffer a drought. 4. Indicate how you think each of the following woul

Federal Reserve's Quantitative Easing Program

Please help with the following problem: The federal reserve has announced an end to their controversial quantitative easing bond purchase program. How will the economy react to this decision?

Ramsey Taxation Problem

Suppose there are two medical goods. Heart surgery and plastic (cosmetic) surgery. The market price for the heart surgery is $100k, the market price for plastic surgery is $10k. The price elasticity of demand for heart surgery is -0.2. The price elasticity of demand for plastic surgery is -3.0. The government is considering

Housing Bubble & Financial Crisis

I am having trouble being objective answering the following questions even after reading the topic twice. I would appreciate help from someone who has a good knowledge of the topic without the personal views I have. The main thing I am looking for is an objective opinion that one single anyone out the way my views do. Questions

International Trade, Exchange Rates, and Macroeconomic Policy

Chapter 7. Problems 3 Suppose that ex is the exchange rate between the U.S. dollar and the Chinese yuan in that ex indicates the number of yuan that can be purchased with one dollar. The demand for dollars, denoted, D$, is given by the equation D$= 2,800 - 200ex. The supply of dollars, denoted, S$, is given by the equation S$

Chapter 5 wk 5 Problem 1

. Problem 1 Suppose that the equation for autonomous planned spending, Apr is Ap = 6,200-200r and the value of the multiplier, k, is 2.5. (a) Derive the equation for the IS curve, Y = kAp. Graph the IS curve for interest rates between 0 and 8, with intervals of one-half of a percentage point. (b) Suppose the equation

Demand and Supply Curve Shift After Market Circumstance

In each of the following scenarios, explain what happens to either the demand or supply curve (a) Supply of orange juice if Florida is hit with very severe weather? (b) Demand for beef if there is a widespread concern for flu coming from chickens?

Eisenhower Guns vs Butter Discussion

In a speech before the American Society of Newspaper Editors (April 16, 1953), President Eisenhower stated: "Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and not clothed. This world in arms is not spending money

Opinion on the 2008 financial crisis

The financial crisis of 2008 caused macroeconomists to rethink monetary and fiscal policies. Economists, financial experts, and government policy makers are victims of what former Fed chairman Alan Greenspan called a "once in a century credit tsunami"—in other words, nobody saw it coming. Based on the analysis of the data,

Fiscal Policy and Government Spending

Two important policy goals of the government and the Fed are to keep unemployment and inflation low, while at the same time making sure that GDP is increasing at an average of 3% per year. It is important to have the right mix of policies and that all the variables be timed perfectly. Part 1: Assume that the country is in a

The Monetary Policy Tools

Identify the four major tools of monetary policy. Then describe how changes in the Fed's major policy tools leads to: 1. Expansionary monetary policies 2. Restrictive or contradictory monetary policies.

Buy America Theme

Do protectionist policies benefit producers, consumers, workers, or the government? Explain. Also please explain how the "Buy American" theme hurts Americans.

Assessing Domestic GDP

Assuming that Country A has a population of 500,000 and only produce 1 good: cars. Country A produces 100,000 cars per year. The people in Country A purchase 90,000 cars, but there are not enough cars to fulfill all the demand. They decide to import 50,000 more. The government buys 25,000 cars for its police force, and 10,00

What is happening to the value of the U.S. dollar these days? What causes the value of the U.S. dollar to rise or fall? Who demands U.S. dollar? Who supplies U.S. dollar? When we purchase German products, does our demand for euro go up or down? What are freely floating exchange rates all about, and how do they work? How can the falling U.S. dollar impact your travel expenses? Why would a cheap dollar relative to other nations' currencies be good or bad for U.S. trade?

What is happening to the value of the U.S. dollar these days? What causes the value of the U.S. dollar to rise or fall? Who demands U.S. dollar? Who supplies U.S. dollar? When we purchase German products, does our demand for euro go up or down? What are freely floating exchange rates all about, and how do they work? How can the