Macroeconomics

Macroeconomics is a study of how governments manage economy. Macroeconomics looks at economy as a whole

Macroeconomics is divided into six major theories (studies):

1. Level of economic activity
2. Aggregate demand and aggregate supply
3. Low unemployment
4. Low and stable inflation rate
5. Economic growth
6. Equity in distribution of income

There are three players in macroeconomy:

1. Producers of goods - companies, manufacturers, private contractors, etc.
2. Consumers of goods
3. Government - tries to manage economy so that needs of producers and consumers are met by achieving certain goals.

There are four goals that government has with respect to economy:

1. Economic growth (healthy rate is 2%)
2. Low unemployment rate (healthy rate is 5%)
3. Low and stable inflation rate (healthy rate is 2%)
4. Equitable distribution of income (taxes, everyone should have equal opportunity)

Two tools to manage economy that they can use to achieve goals:

1. Fiscal policy - controlled by government
2. Monetary policy - controlled by Central bank

Macroeconomics assumes that government officials are elected democratically (through voting mechanisms).