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A Look Inside Macroeconomics

Personal economics deals with one person's economic situation. How does that person get his money? What does he choose to spend it on? Does he choose to spend it all, or will he save some? Does he have enough? Does he need more? How does he get more? The four ways people typically deal with not having enough money are these:

  • They borrow from friends
  • They sell something
  • They do without things
  • They get a better paying job, or get a raise

Macroeconomics has to do with millions and millions of people, all making these same types of decisions. Will everyone have the same answers to the questions asked in the first paragraph? Of course they won't. Having money allows people to express a demand for goods and services, but it does not force people to spend it. Savings also has an impact on the economy. When more people save, there is more money available for businesses to borrow to improve factories or to build new ones.