Macroeconomics

Macroeconomics studies economies as a whole, including aggregate output, inflation, unemployment, and economic growth. It explains how these outcomes interact and how policy can influence them.

Gross Domestic Product: The market value of final goods and services produced within a country during a specified period. It measures aggregate production and anchors comparisons of economic size and growth.
Keynesian Economics: An economic tradition emphasizing aggregate demand, especially when prices and wages adjust slowly. It explains how weak spending can sustain low output and high unemployment.
Monetary Policy: Central-bank actions that influence interest rates, credit conditions, and the money supply. It is a principal tool for managing inflation and aggregate demand.
John Maynard Keynes: A British economist whose work transformed theories of output, employment, and government policy. His analysis of prolonged unemployment established a foundation for modern macroeconomics.
Zero Lower Bound: A constraint that limits conventional interest-rate cuts when nominal rates approach zero. It raises questions about how monetary policy can respond to severe downturns.
Inflation: A sustained increase in the general price level that reduces the purchasing power of money. It captures economy-wide price changes rather than the price of a single good.
IS–LM Model: A model showing equilibrium in goods and money markets through combinations of income and interest rates. It traces how fiscal and monetary changes affect output and interest rates.
Fiscal Policy: Government decisions about taxation and spending that affect public finances and economic activity. It can support demand during downturns or change the economy's resource allocation.
The General Theory of Employment, Interest and Money: A 1936 book by John Maynard Keynes that challenged classical accounts of employment and output. It set out the case that deficient aggregate demand can sustain economic depression.
Liquidity Trap: A situation in which very low interest rates make monetary expansion ineffective at stimulating spending. It motivates debate over fiscal policy and unconventional monetary tools.

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