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.
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