ABSTRACT
The publication of John Maynard Keynes’ General Theory signalled the emergence of macro-economics as a distinct area of economics, and for the first thirty or so years of its separate existence macro-economics was largely dominated by the Keynesian approach. The dominance of macro-economics by the Keynesian approach in the period from the late-’thirties to the late-’sixties and the subsequent largely successful challenge by the monetarists spilled over into policy-making. The effect of Keynesian economics on public attitudes to the level of public expenditure and budget deficits in the post-war era is a good illustration of that point. The assumption of perfect competition is at the heart of most conventional economic theory, whether micro and macro. Macro-economics is often seen as more relevant than microeconomics. In contrast, resource allocation, whilst central to micro-economics, is peripheral to most public discussion of economics. The chapter also presents an overview of the key concepts discussed in this book.
