ABSTRACT
Macro theory within the neo-Walrasian motif seeks to make the same type of statements that can be made through micro theory, in that one variable is said to act directly on another variable. For instance, changes in the stock of money are said to change an index of prices or changes in government spending are said to change the aggregate volume of employment. Macro theory thus has a choice-theoretic character, as illustrated by efforts to make such statements as “capital spending fell because investors became cautious.” A statement that is sensible for an individual is attributed to a society of individuals as well. A society is reduced to an individual by the construction of statistical averages that become the object of theoretical explanation, and with the vehicle of explanation being some model of individual choice.
