1. Introduction
The chapter contrasts macroeconomics with microeconomics, emphasizing how macroeconomic analysis addresses aggregated economic variables affecting a country's overall economy. It introduces key concepts such as four major economic sectors: households, firms, government, and the external sector, and highlights the implications of these sectors and their interactions. The emergence of macroeconomics as a distinct field following the Great Depression is also discussed, showcasing how this shift changed economic thought and policy.
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Sections
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What we have learnt
- Macroeconomics focuses on the economy as a whole rather than individual markets.
- The four major sectors of an economy are households, firms, government, and the external sector.
- Keynes's work laid the foundation for modern macroeconomic thought.
Key Concepts
- -- Macroeconomics
- The branch of economics that studies the behavior, performance, and structure of the economy as a whole.
- -- Microeconomics
- The branch of economics that studies individual agents and markets, focusing on supply and demand dynamics.
- -- Economic Sectors
- The four key sectors in an economy: households, firms, government, and external sector.
- -- Keynesian Economics
- An economic theory advocating for active government intervention in the economy, especially during downturns.
- -- Great Depression
- The severe worldwide economic depression that occurred in the 1930s, leading to significant changes in economic policy.
Additional Learning Materials
Supplementary resources to enhance your learning experience.