I am an economy major, I studied Economic Sciences in highschool which in Morocco is a major specifically for studying macro-economics, It was an incredibly fun major that I learnt a lot in and that I really am thankful that I’ve studied, This major helped me understand a lot of the logical process behind many economic decisions taken by countries that would’ve felt irrational or completely off.

What even is macro-economics?

Damn good question, Economy is split into two general parts - Microeconomy and macroeconomy - As we all know, The word micro means “small”, So microeconomy is basically “small economy” or more specifically its economy on the scale of one individual/household/business, So macroeconomy here is the opposite, Its economy on the scale of an entire country.

Macro-economics is a massive broad subject, It has many sub-topics that can be discussed from fiscal policies to international trade and everything in-between, This post however will only focus on what I deem to be the core elements of macro-economics.

1. Bases: Economical Agents.

This is an extremely fundemental idea in macro-economics, Pretty much the entirety of the topic bases off of it, Macroeconmy generally divides the parties that participate in the economy either directly or indirectly to five distinct “agents”, First one is the State or “public administrations”, This agent represents the public soverign authority that participate in economy through means like fiscality and economic policie.

Second one is Businesses, A business is an economical unit that uses financal, Technical and human capital to create a good or a service to sell in the market for profit, They’re extremely significant participants in the economy because they have the direct ability to control different kinds of markets and they are an active organization of society.

Next up, Financial Institutions, This category specifically groups businesses that exclusively provide financal goods and services - As my teacher would explain it “You give them money, They give you money”, These institutions are the ones who have control of the financial liquidity available in the economy as they’re the ones responsible for handling stuff like savings and loans.

Fourth one up, Households, A household is a group of people who lives under the same roof and have the same consumption (e, g, Family home, Nursing homes, Homeless shelters etc), Households are the economical agent responsible for providing stuff like the force of work, Which is a very important thing for all parties involved, Also they’re responsible for consumption and saving.

Last but not least, The rest of the world, An agent that represents other countries that a certain economy might interact with through imports and exports, They influence the economy because most of the time we’re directly dependant on them for certain stuff.

Knowing who these agents are and who they represent is extremely important because its the bases for macroeconomic lingo and its the key to understanding a lot of economical thesises.

2. Economical policies.

Lots of people wonder “How does a certain state control the country’s economy?”, The answer to this question is economical policies, Which are the main tools for public authorities to regulate markets and fight stuff like unemployment and inflation.

There two main kinds of economical policies, Monetary and budgetary, Each of them has different intermediate goals and ways of working but generally they work for the same final goal that is fighting market imbalances, Market imbalances are basically four main issues that hit economies: Unemployment, Inflation, Economical decline and international trade issues, Of course there are many smaller issues but these are the big four that economical policies combat.

Monetary policy is basically the name we use for the state’s intervention in the economy in order to fight one of the imbalances stated above, It does so through something we call “the monetary mass”, Which is a very complex mathemathical way to call all forms of money circulating the economy in the current time, Coins, Bills, Checks are all part of the monetary mass.

The state basically either increases or decreases this monetary mass depending on the situation at hand, For example, In situations of inflation and all issues brought with it - The state lowers the monetary mass by selling banks financial papers that they can’t instantly turn into cash, Making it harder for people to take loans (because banks don’t have the money to give them) and harder for them to increase demand and then the price with it, Ultimately preventing the general increase of prices that is inflation.

Budgetary policies in the other hand are another way the state can intervene in the economy but this time its through the state’s budget, Each country has a different kind of budgetting but generally you have gains and expenses which the state can control, For example here if we have a situation of mass unemployment than the state can increase spending on stuff like investments and also decrease their fiscal gains (taxes).

Of course, These policies are only temporary fixes to probable structural issues in the economy, Which would require much more permanent and effective fixes.

There are tons of other concepts that I haven’t went over in this blog post and this is mainly because A. I don’t want to end up writing a macroeconomic lecture and B. I’m tired :), So I’ll leave the rest to future blog posts to handle them.

Economy in general is an extremely interesting social science that has existed for ages, And understanding how it works is something I believe is very important in our day and age.