Macroeconomics activity and demand/The macroeconomic model

{{IDevice
 * type=Reading
 * title=The macroeconomic model
 * theme=line
 * body=[[Image:Water-waves-2091856_1920.jpg|thumb|right|400px|Policy reverberations]]

Models are tools by which we simplify reality. They consist of variables that are related by theory, which means a change in one set of factors leads to a subsequent change in other factors. The first set is sometimes referred to as determinants, and the second set is referred to as outcomes.

Before you start your readings, remember that the three major macroeconomic goals are price stability, economic growth, and full employment. Some primary and interrelated outcomes from the goal-based macroeconomic model are outputs and jobs. Those two outcomes that represent employment as resources such as labor, land, and capital are employed in producing outputs. In essence, workers produce outputs, their work generates income, and their income is spent on the outputs from the work of others. The association between outputs and incomes, in part, influences both the prices of goods and services and the price level.

Domestic market forces
Read this article from Wikipedia about the "Washington Consensus"which is the rationale for economic assistance to the developing world. The reading also points out how the rationale obscures the differences between microeconomics and macroeconomics. You should make note of the extent to which the rationale takes into account income distribution and related issues.

External shocks
Read this article, from Wikipedia, about "Shock", which will introduce you to various types of economic shocks, including demand and supply side types.

Policy levers
This article, also from Wikipedia, looks at "Macroeconomic Policy Instruments", and covers covers two basic instruments used to achieve the macroeconomic goals; namely  monetary policy and fiscal policy.}}

Output
This Wikipedia article covers the concept of "Output" and looks at several aspects of quantifying national output for a country.

International balances
Finally, Read this article: Wikipedia: "Balance of Payments". It covers several aspects of the financial outflows and inflows among countries.}}