Chapter Overview
Macroeconomics analyses the economy as a whole—its total output, income, employment, price levels, savings, investment, and foreign trade. It contrasts with microeconomics by focusing on aggregate national income, circular flow of income, and overarching policy instruments. :contentReference[oaicite:1]{index=1}
Important Keywords
- National Income: Total income earned in an economy over a period.
- Aggregate Demand (AD): Sum of consumption, investment, government spending, and net exports.
- Aggregate Supply (AS): Total planned output at different price levels.
- Circular Flow: Income & real flow between households, firms, govt, and foreign sector.
- Leakages & Injections: Savings, taxes, imports (leak) vs investment, govt spending, exports (injection).
- Fiscal Policy: Government’s use of taxation and spending to influence output and inflation.
- Monetary Policy: Central bank’s use of money supply and interest rates to stabilize economy.
Detailed Notes
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