Economic Agents and Keynesian Macroeconomic Principles

Basic Economic Operators: The Family

Families are called economic units of consumption because their primary function is to consume. To achieve the satisfaction of needs, families offer the productive factors that companies receive in exchange for payment. The ability to spend depends on the level of income received as a result of the remuneration of productive resources.

The Role of the Company

The company is the operator that produces and distributes goods and services required by families. Companies are economic agents whose primary function is to produce goods and services. To carry out the procurement of goods and resources, they must organize and manage a series of productive resources that they will have to repay.

The Public Sector and Government

The public sector is a set of institutions or agencies that regulate the collective economic, social, and political decisions of a country. The state acts as both a consumer and a producer:

• As a consumer: It acts as an economic unit of consumption when purchasing goods and services from private companies, financed mainly through taxes.
• As a producer: It acts as an economic unit through companies that produce goods and provide public services.

Levels of Administration

• Local Government: Includes municipalities and county councils.
• Regional Government: Autonomous regions.
• Central Administration: Composed of government ministries and autonomous bodies.
• Public Business Sector: Involved in economic activity as a producer of goods and services.

The Keynesian School of Thought

The ideological principles of this school are based on the thinking of John Maynard Keynes and his seminal work, "The General Theory of Employment, Interest, and Money." Moving away from classical canons, these ideas had a decisive influence on the economic policies of countries after World War II. The school recognizes the existence of market failures and the inability of the market to self-correct, making public sector or state involvement essential. Keynes is the main precursor of the mixed economic system and the Welfare State.

State Intervention and Stabilization

Keynesian theory starts from the claim that the economy does not naturally tend toward full employment; thus, the state must intervene to stabilize the economy. To promote growth, the state can:

• Regulate interest rates to encourage investment.
• Redistribute income with the aim of raising consumption.
• Increase public spending if other measures prove inadequate.

Calculating Company Benefits

The benefits of a company represent the difference between revenues and costs:

• Revenues: The amounts obtained by selling goods or services in a period of time. They are calculated by multiplying the number of units sold by the selling price of each unit.
• Costs: The expenses associated with the production of goods. The amount depends on factors such as productivity.

Both revenues and costs are measured on a scale relating to a specific period of time. While it is an absolute magnitude, it provides a necessary measure of economic performance.