What is MacroEconomics?

What is MacroEconomics?

The term Macro has been derived from the Greek word ‘Makros’ Meaning ‘Large’. Macroeconomics has become more popular after the publication of JM Keyenes ‘General Theory Of Employment’ Or ‘Interest & Money’ in 1936.

Principles of Macroeconomics


Micro-Economics :- solve the economic problems between individuals level.

Macro-Economics :-  Solve the economic problem in whole countries level of problem/Whole Economy.

J.M Keyenes Is Regarded As The Father Of Macroeconomics”

Macroeconomics is the study of aggregates but only at the level of economy as a whole.

When we talk of demand in Macroeconomics we talk of aggregate demand.

Demand For all goods and services by all the sectors in the economy.

The issue that Macro Economists address include the following:-

(1) What determines in Nations long run economic growth?

  • GDP & National Income

(2) What causes a Nations economic activity to fluctuate?

  • Business Cycle

(3) What Causes Price to Rise?

  • Inflation
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Major Economic Issues

1. Long Run Economic Growth

  • Major indicators of Economic Growth – (a) Increase in Real GDP (b) Per Capita GDP OR Per Capita Income
  • Economic growth is a clear objective of Macroeconomic Policy Of a Nations.

2. Business Cycle / Trade Cycle

The prices and output of any economy moves in a series of ups and downs.

There are four phases of Business Cycle :-

(a) Depression (Through)

High unemployment, Low Demand, Low Profits. if the bottom point is abnormally deep, it is called slump.

(b) Recovery

Rise in Employment, Income, Demand & Consumer Spending

(c) Peak (Boom) 

Peak is the top of a Business Cycle. At this point, there are High level of employment, High Demand, Production Capacity is utilised to a maximum level.

The top of abnormally strong recovery is called Boom.

(d) Recession

A recession Or contraction Or downturn in economic activity is a characterized by fall in real GDP, fall in demand, fall in production, fall in employment and profit.

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A Long Lasting Recession Is Called Depression.

Principles Of Macroeconomics


3. Unemployment

Unemployment refers to the number of peoples who are available for work and are actively seeking work but cannot find jobs.

Great Depression – 1930s ( 1933, the Unemployment rate was 25%)

Macroeconomics is the offspring / Born of the problem of unemployment.

4. Inflation

Inflation is a general rise in prices of almost all the commodities over a period of time. values of money and purchasing power of peoples fall with inflation.

( Inflation must be controlled otherwise it will create a Hyper Inflation Or Exterem Inflation )

* Tools Of Control Inflation – Fiscal Policy & Monetary policy

5. International Economy

Macroeconomics also studies trade among different countries. international trade, tarrif, protection, borrowing, etc.

  • Open Economy – extensive trading & financial relationships with national economies.
  • Closed Economy – Closed Economy doesn’t interact economically with the rest of the world.

Principles Of Macroeconomics


Conclusion: In this article we learn about ‘Introduction of Macroeconomics’. This Article Is Very Important For All students who adopt ‘MacroEconomics’ Subject.

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