Macroeconomics

Macroeconomics examines the economy as a whole to explain broad aggregates and their interactions "top down," that is, using a simplified form of general-equilibrium theory।Such aggregates include national income and output, the unemployment rate, and price inflation and subaggregates like total consumption and investment spending and their components। It also studies effects of monetary policy and fiscal policy. Since at least the 1960s, macroeconomics has been characterized by further integration as to micro-based modeling of sectors, including rationality of players, efficient use of market information, and imperfect competition. This has addressed a long-standing concern about inconsistent developments of the same subject।.
Macroeconomic analysis also considers factors affecting the long-term level and growth of national income। Such factors include capital accumulation, technological change and labor force growth।।

Growth World map showing GDP real growth rates for 2008Main articles: Economic growth and General equilibriumGrowth economics studies factors that explain economic growth – the increase in output per capita of a country over a long period of time। The same factors are used to explain differences in the level of output per capita between countries. Much-studied factors include the rate of investment, population growth, and technological change. These are represented in theoretical and empirical forms (as in the neoclassical growth model) and in growth accounting.

Depression and unemploymentSee also: Circular flow of income, Aggregate supply, Aggregate demand, Great Depression, and UnemploymentThe economics of a depression were the spur for the creation of "macroeconomics" as a separate discipline field of study। During the Great Depression of the 1930s, John Maynard Keynes produced a book entitled The General Theory of Employment, Interest and Money. In it he argued that markets were not self correcting and that if the economy was in a crisis of confidence and downward spiral, it was necessary for government to use spending to stimulate the economy (and the animal spirits of the people to regain confidence) back to good health. It would pay the money back later. Otherwise a general deficit of effective demand would lead to a very long slump. A crisis in confidence could send stock markets plummeting, meaning companies go out of business, meaning more redundancies and fewer people with jobs, meaning people have less money to spend, meaning businesses have fewer customers, meaning more companies go out of business, and so on. The circular flow of income needed an external boost by the state.

Inflation and monetary policyMain articles: Inflation and Monetary policySee also: Money, Quantity theory of money, Monetary policy, History of money, and Milton Friedman A 640 BCE one-third stater electrum coin from Lydia, shown larger। One of the first standardized coins.Money is a means of final payment for goods in most price system economies and the unit of account in which prices are typically stated. It includes currency held by the nonbank public and checkable deposits. It has been described as a social convention, like language, useful to one largely because it is useful to others. As a medium of exchange, money facilitates trade. Its economic function can be contrasted with barter (non-monetary exchange). Given a diverse array of produced goods and specialized producers, barter may entail a hard-to-locate double coincidence of wants as to what is exchanged, say apples and a book. Money can reduce the transaction cost of exchange because of its ready acceptability. Then it is less costly for the seller to accept money in exchange, rather than what the buyer produces.

At the level of an economy, theory and evidence are consistent with a positive relationship running from the total money supply to the nominal value of total output and to the general price level। For this reason, management of the money supply is a key aspect of monetary policy.

Fiscal policy and regulationMain articles: Fiscal policy, Government spending, Regulation, and National accountsNational accounting is a method for summarizing aggregate economic activity of a nation। The national accounts are double-entry accounting systems that provide detailed underlying measures of such information। These include the national income and product accounts (NIPA), which provide estimates for the money value of output and income per year or quarter. NIPA allows for tracking the performance of an economy and its components through business cycles or over longer periods. Price data may permit distinguishing nominal from real amounts, that is, correcting money totals for price changes over time.The national accounts also include measurement of the capital stock, wealth of a nation, and international capital फ्लोव्स.