John Maynard Keynes published The General Theory of Employment Interest and Money in 1936. This publication marked the start of macroeconomics as a distinct field of research.
Macroeconomists track output, unemployment, and inflation as their three central variables. Gross domestic product measures total net output while unemployment rates calculate the percentage of people seeking work without jobs.
Milton Friedman updated quantity theory of money because the 1970s oil shocks created high unemployment and high inflation simultaneously. This phenomenon vindicated his argument that monetary policy was more effective than fiscal policy for stabilizing economies.
Expansionary monetary policy lowers short-term interest rates to increase economic activity. Central banks follow inflation targeting strategies keeping medium-term inflation close to explicit targets like 2%.
Robert Solow and Trevor Swan developed growth models in the 1950s explaining long-run economic expansion. Their framework assumes labor and capital used at constant rates without business cycle fluctuations.