What is macroeconomics?

Macroeconomics is the study of whole economies--the part of economics concerned with large-scale or general economic factors and how they interact in economies. The Federal Reserve closely examines macroeconomics because its goals--maximum sustainable employment and stable inflation--are measured and achieved on an economywide level, not on an individual level. Macroeconomists study such questions as: What makes the business cycle fluctuate; what makes economic growth go up and down; how are prices determined; what is the rate of inflation, and what determines it; what is productivity growth; and what are the determinants of productivity? Importantly, macroeconomists also study the role government has in determining the pace of growth, the long-run rate of potential output in an economy, and the inflation rate. The Fed cares about macroeconomics because its goals are determined and defined in macroeconomic concepts: Stable inflation or stable prices and maximum employment are measured and achieved on an economywide, macroeconomic level, not at an individual level. Because the Fed's goals are macroeconomic goals, it often thinks in terms of macroeconomics.

Accessible Keys for Video

[Space Bar] toggles play/pause;

[Right/Left Arrows] seeks the video forwards and back (5 sec );

[Up/Down Arrows] increase/decrease volume;

[M] toggles mute on/off;

[F] toggles fullscreen on/off (Except IE 11);

The [Tab] key may be used in combination with the [Enter/Return] key to navigate and activate control buttons, such as caption on/off.

Back to Top
Last Update: October 19, 2017