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Macroeconomics

 

Definition: Concerned with the economy as a whole rather than individual units/ sectors. Macroeconomics is concerned with the study of aggregate demand and aggregate supply.

Macroeconomic objectives:

  • Economic growth (stable, over the long-term)
  • Unemployment (lower unemployment reduces toll on government revenue)
  • Inflation (low, stable, 2-3% targets are desirable)
  • Balance of payments (encourage growth in exports, control growth in imports, match or exceed earnings in foreign currency with earnings in domestic currency)

 

Additional Info: The tools available for pursuing these objectives are interest rates, money supply, taxes, government expenditure and exchange rates. These are known as ‘intermediate’ variables.

Related Terms: Aggregate Demand - Aggregate Supply - Microeconomics - Rate of Inflation

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