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Macroeconomics is the study of the entire economy in terms of the total amount of goods and services produced, total income earned, the level of employment of productive resources, and the general behavior of prices. Macroeconomics can be used to analyse how best to influence policy goals such as economic growth, price stability, full employment and the attainment of a sustainable balance of payments.

Until the 1930s most economic analysis concentrated on individual firms and industries. With the Great Depression of the 1930s, however, and the development of the concept of national income and product statistics, the field of macroeconomics began to expand. Particularly influential were the ideas of John Maynard Keynes, who used the concept of aggregate demand to explain fluctuations in output and unemployment. Keynesian economics is based on his ideas.

One of the challenges of economics has been a struggle to reconcile macroeconomic and microeconomic models. Starting in the 1950s, macroeconomists developed micro-based models of macroeconomic behavior (such as the consumption function). Theorists such as Robert Lucas Jr suggested (in the 1970s) that at least some traditional Keynesian macroeconomic models were questionable as they were not derived from assumptions about individual behavior. However, New Keynesian macroeconomics has generally presented microeconomic models to shore up their macroeconomic theorizing, while the Lucas critique has fallen from favor.

Today the main schools of macroeconomic thought are as follows:

See also

Macroeconomic concepts
IS/LM model -- Monetary policy -- Central bank -- Money -- Currency -- Purchasing power parity -- Gold standard -- Inflation -- Unemployment -- Adaptive expectations -- Rational Expectations -- Economic rationalism -- Measures of national income -- Balance of trade -- Gresham's Law -- Reaganomics -- Recession -- Stockholm school

Macroeconomic schools
Keynesian economics -- Monetarism -- New classical economics -- New Keynesian economics -- Austrian economics -- supply side economics -- Welfare economics

John Maynard Keynes -- Milton Friedman -- Robert Lucas Jr -- Jose Victor Rios Rull -- Robert Mundell

Related topics
Development economics -- Economics -- Political economy -- List of economics topics -- List of economic geography topics -- List of international trade topics -- Important publications in macroeconomics