Welcome to the Learn How Society Works (macroeconomics) WikiEdit

INTRODUCTION---The subject of macroeconomics Edit

Within our society, the overall process of its active progress in economic terms is called macroeconomics. This process in a country is considered here as a whole. This topic deals with the production of goods and services, their distribution and use and the associated money which is used in exchange for most of them, along with the necessary resources.

When expressed in terms of how our society works, macroeconomics has been badly understood and worse taught in the past. Nobody seems to want to give the true and complete picture. Having researched a better and more logical means for properly explaining this, the writer wishes to share this information.

It might be thought that this subject is very involved or complex, however the methods used below result in the absolutely most simple way of comprehensively representing the whole picture. This presentation is easy to understand. It is by a scientific theoretical logical approach, as suggested by Prof. Albert Einstein in his criterion for a good scientific theory (also known as Occam's Razor).


In order to achieve this objective we must first consider all of the things that our society is capable of doing in economic terms. Although there are millions of participants in any country, some thought on this matter of economic acts shows that there are only 19 different kinds of activities or functions, each of which has a flow of money in exchange for a flow of goods, services and/or valuable legal documents.

These various mutual flows pass between different kinds of agents (or as I prefer to call them entities), which are assumed here to be the average for all of the many similar-acting ones. This results in the need for a second assumption in that these entities are idealized, namely that they are of a pure and simple nature.

There are 6 entities which are: Landlord, Government, Householder, Producer, Capitalist and Finance Institution.


The reader should begin to see that this process of realization requires the use of a model. In this case the model may be expressed in different ways. The first model shown here is called a block and flow diagram. It is of a kind used by engineers for explaining how things are related and work--indeed what we are doing here is to treat our topic as if it were an engineering system, which to a large degree it is. This is because our society was the result of previous human organization and design. Later we can see that such a system can be engineered for different (better) performance.


Circulation of Money and Goods, Services, Documents, etc.

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