ECON 295 Chapter 19: Chapter 19.docx
9 Jan 2015
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Document Summary
Macroeconomics is the study of how the economy behaves in broad outline without dwelling on much of the detail that occurs in markets for individual products. Macroeconomics is concerned with the behaviour of economic aggregates (resulting from activities in many different markets). Studying economic aggregates allows us to view the big picture. (when aggregate output rises, the output of many commodities and the incomes of many people rise with it). Macroeconomics considers two aspects of the economy: short-run behaviour of macroeconomic variables (business cycles) and the long-run behaviour of the same variables (study of economic growth). There are also two different steams of research in macroeconomics. The first based on microeconomic foundations builds models of the economy that are populated by workers, consumers, and firms all of whom are assumed to be optimizers. The second group of researchers construct their models using aggregate relationships for consumption, investment and employment subject to extensive empirical testing.
