Macroeconomics is the study of the economic performance of nations and the effectiveness of policies that governments use to try to improve that performance. Among the issues that macroeconomists study are the sources of our increasing material standard of living, the causes of economic instability reflected in high unemployment and inflation, and the impact globalisation has on the management of our economy. The performance of our economy impacts on the availability of jobs, mortgage interest rates, the value of the Australian dollar, the prices we pay in the supermarket and our overall standard of living. As such, macroeconomic performance affects everyone. In this course we explore simplified models of the macroeconomy, and use deductive reasoning and available data, to try to understand how the various macroeconomic variables interact and produce the outcomes that so concern society as a whole. In particular, we concentrates on the interaction of the taxing and spending of government with the wider economy. Some of the issues we will examine are hotly contested and we introduce controversies among economists regarding macroeconomic theory and policy.