Economics: Macroeconomics Macroeconomics Question #5756 from malar
what is macroeconomics?
Macroeconomics – the field of economy that studies movement and trends in the economy on the aggregate level. The main things that are studied:
- national income;
- rate of growth;
- gross domestic product;
- unemployment, inflation;
- price levels, etc.
For example, macroeconomics might consider the industrial sector, the services sector and others in general, but it doesn’t consider specific parts of any sectors
Traditionally, in the United States the study of macroeconomics has had two main schools. Put simply:
- Keynesian school of macroeconomics focuses on total demand and looks to both fiscal policy (government spending levels) and monetary policy (money supply growth) for solutions;
- The Monetarism school of macroeconomics rejects fiscal policy as a means of managing the economy and looks to monetary policy exclusively for answers.
These major schools of macroeconomics have now developed offshoot and successor movements, such as New Keynesian Economics and New Classical Macroeconomics. Macroeconomics has major consequences for investors, as company earnings models are heavily dependent on growth in the overall economy, and bond (and, to a lesser extent, stock) prices are strongly determined by the level of interest rates.