Unit 2: Macroeconomics

What is Macroeconomics?

Macroeconomics is the study of whole economies--the part of economics concerned with large-scale or general economic factors and how they interact in economies. The Federal Reserve closely examines macroeconomics because its goals--maximum sustainable employment and stable inflation--are measured and achieved on an economy-wide level, not on an individual level. Macroeconomists study such questions as: What makes the business cycle fluctuate; what makes economic growth go up and down; how are prices determined; what is the rate of inflation, and what determines it; what is productivity growth; and what are the determinants of productivity? Importantly, macroeconomists also study the role government has in determining the pace of growth, the long-run rate of potential output in an economy, and the inflation rate. The Fed cares about macroeconomics because its goals are determined and defined in macroeconomic concepts: Stable inflation or stable prices and maximum employment are measured and achieved on an economy-wide, macroeconomic level, not at an individual level. Because the Fed's goals are macroeconomic goals, it often thinks in terms of macroeconomics.

Source: https://www.federalreserve.gov/faqs/what-is-macroeconomics.htm

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