Macroeconomics

Interactive visualizations for learning macroeconomics by moving the ideas yourself — starting from the micro choices you already know, and asking what changes when everyone makes them at once.

• 1. The Macro Lens — Micro asked how a single market clears; macro asks how big the whole economy is and why it shakes. This chapter measures GDP through the circular flow, then shows why three schools answer the same shock differently — in the end, because of one assumption: how fast prices move.
• 2. Aggregate Demand and Supply — In micro, one market's demand and supply set that market's price. In macro, the lens widens to the whole economy: aggregate demand and aggregate supply — every market's demand and every firm's supply summed — set the price level and total output together. The curves look like their micro cousins, but the reasons they slope are entirely different.
• 3. Spending, the Multiplier, and the Paradox of Thrift — In micro, one person's spending ends as that person's choice; in macro, my spending is your income. Touch the multiplier — spending and income creating each other in a loop — and the paradox of thrift, where everyone trying to save more leaves everyone saving no more.
• 4. Money and Prices — In micro, a price was an exchange ratio between two goods; in macro, the price level — all prices bundled into one number — and money, the ruler that measures it, take center stage. Can the price level rise while no relative price moves? If money doubles, do only prices double? The price level and the equation of exchange plant the seed of money neutrality.
• 5. Where the Interest Rate Is Decided — In micro, an interest rate was the price of a single deal, like the interest on one cafe's loan; in macro, it becomes the one price that steers saving, investment, and demand across the whole economy. But the schools split over which market sets it — the classicals watch the market for saved funds, Keynes watches the market for money.
• 6. The Two Faces of Wages, and Unemployment — In micro, a wage was a cost the firm pays, and a price that slipped out of place snapped right back. In macro, a wage is a cost and a household's income at the same time, and prices are held in place by menu costs. Two models let you touch the fallacy of composition the wage's two faces create, and how quantities and jobs end up absorbing shocks when prices will not move.
• 7. The Open Economy and Trade — In micro, trade between countries was still the equilibrium of one market at a time; in macro, the whole economy's saving and investment decide the trade outcome. Starting from the identity that the trade balance is saving minus investment ($NX = S - I$), this chapter shows why a tariff cannot fix a deficit, and why the exchange rate is the price that moves to keep that identity true.
• 8. Growth: Solow and Beyond — In micro, one firm's production and one household's choices were settled separately; in macro, we pile up every firm's machines and every household's saving and run the sum for decades. This chapter shows why stacking capital alone makes growth stop (Solow), and how dynamic programming pulls the household's choices out from behind the saving rate (Ramsey).
• 9. Risk and Uncertainty — Micro treated one person's risk aversion and one firm's expected profit separately; in macro, those attitudes add up and move the economy itself. Faced with risk — probabilities known — people buy insurance and firms lean on diversification. But when uncertainty grows, with the probabilities themselves unknown, households retreat into precautionary saving and firms into wait-and-see, and demand freezes even though no average has worsened. This chapter traces both attitudes from the person to the economy.

Glossary