Measuring and managing economic growth, observing the flows of money and goods and services throughout the economic sectors, foreseeing and forestalling the crises of the business cycle, deciding whether and how much government regulation is best—all lie within the realm of macroeconomics. While microeconomics focuses on the individual and firms, macroeconomics takes the wide view, encompassing all businesses, consumers and households, government, labor and unemployment, money, central banks and the banking system, inflation, deflation, recessions, and more.

Macroeconomics came into being largely as a result of the Great Depression of the 1930s. John Maynard Keynes developed a theory that broke from the prevailing classical ...

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