(This is an archived page, from the Patterns of Power Edition 3 book. Current versions are at book contents).
Macroeconomic policies are those that affect the economy as a whole. Samuelson and Nordhaus, in chapter 21 of Economics, explain both the scope and importance of macroeconomics:
“Thanks to Keynes and his modern successors, we know that in its choice of macroeconomic policies – those affecting the money supply, taxes, and government spending – a nation can speed or slow its economic growth, trim the excesses of price inflation or unemployment from business cycles, or curb large trade surpluses or deficits.” [p. 381]
Macroeconomics is a contested subject. It is not possible to precisely calculate the impact of policy decisions: there are doubts about the accuracy of both current and historical data, there are disagreements about their interpretation, and the world is continually changing – which makes forecasting difficult. Difficult judgements have to be made in choosing the best policy:
· Managing government spending, taxation and borrowing (188.8.131.52);
· Responding to the economic cycle with a stimulus (184.108.40.206);
· Inflation, monetarism and the role of central banks (220.127.116.11);
· Balance of trade and currency exchange rates (18.104.22.168);
· Macroeconomic policy can affect the balance of power between the major economic actors (22.214.171.124).