Basic macroeconomics

Unlike microeconomics, macroeconomics focuses on the aggregate of an economy. This is typically broken down by country, as government involvement is greatly considered.

Basic terms

Business cycle

  • Depression—prolonged downturn
  • Recession—downturn of at least 2 quarters of less aggregate output
  • Expansion—output and employment rising


Employment—number of people currently working for pay

Unemployment—number of people actively looking for work but aren’t employed

Labor force—employed + unemployed

Unemployment rate—% of labor force that is unemployed


Output—quantity of goods and services produced

Aggregate output—economies total production of goods and services for a certain amount of time, typically a year

Economic growth—increase in maximum output possible

Price level

Inflation—overall price level ↑

Deflation—overall price level ↓

Price stability—overall price level constant or changing very slowly

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