Macroeconomics studies Aggregate Pheonomena of: GDP / Employment / Investment / Inflation & Money / LR growth / Investment, Govn’t Expenditure, Exports.

  • Began formally from the 20th century after the Great Depression; before that it ways just microeconomics. (Keynes & Hayaek)
  • Static vs Dynamic
    • Static: comparing at the same point in time
    • Dynamic: comparing at different points in time
    • e.g. Comparative statics, like an exogenous increase in demand causing to increase
  • Economic Time in macro covers usually the following timeframes:
    1. Short Run (SR): several years
    2. Medium Run (MR): 1~2 years
    3. Long Run (LR): Decades
  • Real vs Nominal Variables.
    • Real: real things as units (cars, hours, gallons), or base-year currency
    • Nominal: values in currency at a certain year



Circular Flow of Income