What is macro economics

For instance, when the government pays for a bridge, the project not only adds the value of the bridge to output, but also allows the bridge workers to increase their consumption and investment, which helps to close the output gap.

When the government takes on spending projects, it limits the amount of resources available for the private sector to use. In addition, purchasing power from the price decline increases ability to buy the income effect. The cost can comprise any of the factors of production: Unable to lower current interest rates, the Federal Reserve lowered long-term interest rates by buying long-term bonds and selling short-term bonds to create a flat yield curve.


People who are retired, pursuing education, or discouraged from seeking work by a lack of job prospects are excluded.

The opportunity cost of an activity is an element in ensuring that scarce resources are used efficiently, such that the cost is weighed against the value of that activity in deciding on more or less of it. Outside of macroeconomic theory, these topics are also important to all economic agents including workers, consumers, and producers.


In reality, these two economic fields are remarkably similar, and the issues they study often overlap significantly. By choosing one job over another, you may gain opportunities but lose others. It concludes that in a perfectly competitive market with no externalitiesper unit taxesor price controlsthe unit price for a particular good is the price at which the quantity demanded by consumers equals the quantity supplied by producers.

If you are interested in learning more about economics, take a look at What is "marginalism" in microeconomics and why is it important?

A unifying theme is the attempt to optimize business decisions, including unit-cost minimization and profit maximization, given the firm's objectives and constraints imposed by technology and market conditions.

Microeconomic theory progresses by defining a competitive budget set which is a subset of the consumption set. Consistent with classical unemployment theory, frictional unemployment occurs when appropriate job vacancies exist for a worker, but the length of time needed to search for and find the job leads to a period of unemployment.

Microeconomics focuses on supply and demand and other forces that determine the price levels seen in the economy. Find out more about microeconomics in How does government policy impact microeconomics? It goes without saying that broad macroeconomic changes will inevitably be felt at both the corporate and the individual level.

Since inflation raises the price of goods, services and commodities, it has serious effects for individuals and businesses. Both forms of policy are used to stabilize the economywhich can mean boosting the economy to the level of GDP consistent with full employment.


Advances in technology, accumulation of machinery and other capitaland better education and human capital are all factors that lead to increased economic output over time. Changes in price level may be the result of several factors.

The Difference Between Micro and Macro Economics

Changes in the non-price level factors or determinants cause changes in aggregate demand and shifts of the entire aggregate demand AD curve.

It is important to note the distinction between macroeconomics and microeconomics. Macroeconomists develop models explaining relationships between a variety of factors such as consumption, inflation, savings, investments, international trade and finance, national income and output.Definition of macroeconomics: Study of the behavior of the whole (aggregate) economies or economic systems instead of the behavior of individuals, individual firms, or markets (which is the domain of Microeconomics).

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Definition: Macroeconomics is the branch of economics that studies the behavior and performance of an economy as a whole.

It focuses on the aggregate changes in the economy such as unemployment, growth rate, gross domestic product and inflation. Economics (/ ɛ k ə ˈ n ɒ m ɪ k s, iː k ə-/) is the social science that studies the production, distribution, and consumption of goods and services.


Economics focuses on the behaviour and interactions of economic agents and how economies work. Macroeconomics definition is - a study of economics in terms of whole systems especially with reference to general levels of output and income and to the interrelations among sectors of the economy.

May 19,  · The difference between micro and macro economics is simple. Microeconomics is the study of economics at an individual, group or company level. Macroeconomics, on the other hand, is the study of a national economy as a park9690.com: Nick Gibson.

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What is macro economics
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