What is Macroeconomics

 

Introduction of Macroeconomics

Macroeconomics is the branch of economics that deals with the structure, performance, behavior, and decision-making of the whole, or aggregate economy.

Other Definitions:

• Macroeconomics in its modern form is often defined as starting with John Maynard Keynes and his theories about market behavior and governmental policies in the 1930s; several schools of thought have developed since.

• In contrast to macroeconomics, microeconomics is more focused on the influences on and choices made by individual actors in the economy (people, companies, industries, etc.).

• Macroeconomics understands the aggregate economy and takes all markets together – goods and services (houses and haircuts, exports and imports), – financial assets (bonds and bank deposits), – labor (consultants and carpenters)  and link these into an entire country’s aggregate demand and aggregate supply. 

• Macroeconomics links the function of markets, governments, and financial institutions like banks , understand fiscal and monetary policies of the government and also understand the aggregate indicators like employment, interest rates, unemployment, growth, exchange rates of an economy

Why Macroeconomics 

(Why macroeconomics is so Important)

• Macroeconomics connects together the countless policies, resources, and technologies that make economic development happen. 

• Without proper macro management, poverty reduction and social equity aren't possible.

• It helps countries to solve various economic problems like poverty, unemployment, inflation, deflation etc., whose solution is possible at macro level only.

• With such a detailed knowledge of the functioning of an economy at macro level, it has been possible to formulate correct economic policies and also coordinate international economic policies. 

• It has saved us from the dangers of application of microeconomic theory to the problems that require us to look at the economy as a whole.

Advantages of Macroeconomics