ABSTRACT
This chapter provides a foundation for understanding how the macroeconomy works by introducing the several essential economic activities and examining the role of markets in the economy. A more in-depth analysis of the concepts, including questions on how production and consumption decisions are made, is the subject of microeconomics, not macroeconomics. In contemporary economies, distribution activities take two main forms: exchange and transfer. In macroeconomics, the activity of consumption is frequently contrasted with the resource-management activity of investment. Modern households can save by spending less money on consumption than their income would allow. The activity of resource management involves sustaining, and sometimes restoring, the asset base of an economy. Resource-management activities help to keep up the quantity and quality of important capital stocks. A sustainable socioeconomic system creates a flow of whatever is needed by using its renewable capital stocks without depleting or degrading them.
