Issues in Macroeconomics:
Conclusion and Summary


Calling unemployment, inflation, the business cycle, foreign exchanges, and long-term economic growth "problems" suggests a search for solutions. To some observers, the only obvious problem-solver around is the government. And that suggests then that government policy should be the focus of discussion. But of course the optimal government policy may be to have no policy. In the long run a central question in macroeconomics is: What kinds of policies, if any, should the government set to cure macroeconomic problems? Another, more fundamental question, is: what is society's vision of the macroeconomic promised land?


1) Macroeconomics is the study of the whole economy.

2) Unemployment is a waste of resources and a demoralizing human experience. Since it is difficult to determine the number of unemployed, official unemployment figures must be regarded cautiously.

3) Inflation and unemployment are the "twin evils" of the macroeconomy. Inflation is a rise of prices in general. Inflation is especially hard on people who live on a fixed income, though it helps others. Inflation causes uncertainty and there is the danger of inflation running away to become hyperinflation.

4) Macroeconomic magnitudes (such as inflation and unemployment) move up and down, in what is described as a "business cycle." The instability of the economy is a major macroeconomic problem.

5) The value of the dollar vis a vis other currencies fluctuates causing fluctuations in imports and exports.

6) Economies rise and fall from year to year, but the past two centuries they have grown. Growth rates vary from country to country. The question that underlies much of macroeconomic thinking, is: How to improve the growth rate of an economy?

7) Economic policies are the solutions that governments bring to the macroeconomic problem. Yet good policies are hard to find. A bad policy may be worse than nothing at all.