INTRODUCTION TO MACROECONOMICS

INTRODUCTION TO MACROECONOMICS
- Economics is the study of how a society allocates its limited resources among

unlimited wants and needs. At the most fundamental level economics is the study

of choice making.

- Traditionally the study of economics is divided into microeconomics  and

macroeconomics.

- Microeconomics deals with choice making by individuals in the society

(consumers and producers). For example, some prices increase and some prices

decrease

1.  Macroeconomics focuses on the choice making by the entire society.

Price index for all commodities.

2. Microeconomics is trees and animals in the forest.

Macroeconomics is the forest as a whole..

A. Objectives of Macro

- Output level and growth rate of output

- Unemployment

- Inflation

- Balance of payment

- Growth and development

B. Markets in Macro

- Goods market

- Financial market: Money, bonds, stock markets

- Labor market

- Foreign exchange market

C. Agents in Macro

- Households and individuals

- Firms

- Financial system

- Government

- International organizations

D. Macroeconomic Policy

Fiscal policy: Tax or/and government spending

Monetary policy: Money supply/interest rates

Wage policy

Exchange rate policy

Source: Mr. Ngai of UEH