HE2002 Macroeconomics II

Macroeconomics is the study of the economy as a system. While microeconomics is focused on the choices of an individual household or firm and interactions in a particular market, macroeconomics examines the whole economy and is therefore concerned with aggregates. The demands of all the individual consumers and the supply provided by all individual firms are aggregated together into a whole. The role of the government and the financial markets in the economy also become much clearer, as do the effects of international trade and financial transactions. Macroeconomics makes it possible to examine certain questions which relate to the whole economy, and which are difficult to answer if we just focus on any individual market. Issues such as unemployment, inflation and the business cycle can be studied much more effectively using the tools of macroeconomic analysis and these and other issues will be covered in the subject.