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Introduction to Macroeconomics - Coggle Diagram
Introduction to Macroeconomics
Differences between Microeconomics and Macroeconomics
Microeconomics
Deals with households' and firms' decision
Studies individual prices
Studies individual income
Analyses demand and supply of goods
Macroeconomics
Deals with aggregate decisions
Studies overall price level
Studies national income
Analyses aggregate demand and aggregate supply
Government policies
Monetary policy
Contractionary policy
Reduces money supply
Expansionary policy
Increases money supply
Growth policy
Fiscal policy
Expansionary policy
Reduces tax
Increase government expenditure
Contractionary policy
Increase tax
Reduces government expenditure
Macroeconomic goals
Price stability
Economic growth
Full employment
Equitable distribution of income
Components of Macroeconomics
Government
Firms
Foreign sector
Household
Aggregate demand and Aggregate supply
AD shows negative relationship between price level and real GDP
AS shows positive relationship between price level and real GDP
Complications of Macroeconomic goals
Goals : Full employment and price stability
Goals : Economic growth and price stability
Goals : Economic growth and and equilibrium in balance of payments