Concept of Macroeconomics – Meaning, Definitions and Nature
Meaning of Macroeconomics
The field of economics has been divided into two distinct area of study: microeconomics and macroeconomics. Microeconomics is that branch of economics which analyses the market behaviour and decision-making process of the individual consumers and firms and also the interactions between individual buyers and sellers. Microeconomics focuses on the demand, supply, and equilibrium, and the price and output determination in individual markets.
Macroeconomics, on the other hand, is the study of how the national economy as a whole grows and the changes that occur overtime. Thus, it analyses the big or the macro picture. Hence, the basic concerns of macroeconomics are to measure as to how well an economy performs, works, and then try to improve the performance of the economy.
Several economists have attempted to define macroeconomics according to their own perception of the subject matter. Let’s have a look at some relatively comprehensive definitions of macroeconomics that would give a broad view of what macroeconomics is about.
Definitions of Macroeconomics
Gardner Ackley
Macroeconomics ··concerns the over-all dimensions of economic life. …. More specifically, macroeconomics concerns itself with such variables as aggregate volume of an economy, with the extent to which its resources are employed. with size of the national income. with the ·general price level “.
Kenneth E Boulding
“Macroeconomics is the study of the nature. relationship and behavior of aggregates of economic quantities…. Macroeconomics deals not with individual quantities as such, but aggregates of these quantities … not with individual incomes, but the national income, not with i individual prices. but with the price levels, not with individual output, but with the national output”.
J. M. Culbu rtson
Macroeconomic theory is the theory of income, employment, prices and money”.
P. Samuelson
Macroeconomics is the study of the behavior of the economy as a whole. I t examines the overall level of a nation ‘s output. employment, prices. and foreign trade.”
Nature of Macroeconomics
1. Macroeconomics in interdisciplinary . It draws knowledge, perspectives, and methodologies from multiple fields of study.
2. Macroeconomics has global impact. Macroeconomics examines economies at a national and global level, analyzing factors like GDP, unemployment, and inflation. It guides policy formulation, predicts trends, and ensures stable economic growth, offering crucial insights into a country’s overall economic health and prospects.
3. Macroeconomics takes holistic view of the economy. It examines the economy as a whole whether international, regional, or national.
4. Macroeconomics is also known as the theory of income and employment, or simply income analysis.
5. It is concerned with the problems of unemployment, economic fluctuations, inflation or deflation, international trade and economic growth. It is the study of the causes of unemployment, and the various determinants of employment.
6. In the field of business cycles, it concerns itself with the effect of investment on total output, total income, and aggregate employment.
7. In the monetary sphere, it studies the effect of the total quantity of money on the general price level.
8. In international trade, the problems of balance of payments and foreign trade fall within the purview of macroeconomic analysis.
9. Above all, macroeconomic theory discusses the problems of determination of the total income of a country and causes of its fluctuations.
10. Finally, it studies the factors that retard growth and those which bring the economy on the path of economic development.
