Macroeconomics is the study of the performance of national economies and of the policies governments use to try to improve that performance. Some of the broad issues macroeconomists study are:
Sources of economic growth and improved living standards
Trends in average labor productivity, or output per employed worker
Short-term fluctuations in the pace of economic growth (recessions and expansions)
Causes and cures of unemployment and inflation
Economic interdependence among nations
To help explain differences in economic performance among countries, or in economic performance in the same country at different times, macroeconomists study the implementation and effects of macroeconomic policies. Macroeconomic policies are government actions designed to affect the performance of the economy as a whole. Macroeconomic policies include monetary policy (the determination of the nation's money supply), fiscal policy (relating to decisions about the government's budget), and structural policy (aimed at affecting the basic structure and institutions of the economy).
In studying economic policies, economists apply both positive analysis (an objective attempt to determine the consequences of a proposed policy) and normative analysis (which addresses whether a particular policy should be adopted). Normative analysis involves the values of the person doing the analysis.
Macroeconomics is distinct from microeconomics, which focuses on the behavior of individual economic entities and specific markets. Macroeconomists make heavy use of aggregation, which is the adding up of individual economic variables into economywide totals. Aggregation allows macroeconomists to study the "big picture" of the economy, while ignoring fine details about individual households, firms, and markets.
