The Macroeconomic Landscape

August 29, 2023

Let’s start with defining macroeconomics. Merriam-Webster defines macroeconomics as “a study of economics in terms of whole systems, especially with reference to general levels of output and income and to the interrelations among sectors of the economy.”

Once referred to as “The Dismal Science”, economics is essentially the study of human behavior. Why a science? Likely because as the forces that drive the economy such as interest rates, investment, monetary and fiscal policies, they drive human behavior changes in very predictable patterns. Unlike actual science however, economic factors are not bound by laws of physics, chemistry etc. People are perfectly able to act in un-predictable ways…….but they don’t. At least not in the aggregate.

Macroeconomics is interesting and important to know since it impacts each person’s life every day whether one realizes it or not. If interest rates go up or down, your life is impacted. The Federal Reserve prints money and your life is impacted. The key is to fully understand these impacts so as to be informed enough to make sound decisions and then better prepare for the short, medium and long term. Fiscal and monetary policies are both aspects of macroeconomics with fiscal policy (government spending and raising/lowering taxes) being executed by the federal government and monetary policy…