Business, Legal & Accounting Glossary
Macroeconomics is the study of ‘big picture’ economics that relates to countries, regions or organisations as a whole, rather than individuals or families. It analyzes economic principles as related to unemployment, inflation, industry, and government.
Macroeconomics (from the Greek prefix makro- meaning “large” + economics) is a branch of economics dealing with the performance, structure, behaviour, and decision-making of an economy as a whole.
It is the study of the entire economy in terms of the total amount of goods and services produced, total income earned, the level of employment of productive resources, and the general behaviour of prices.
Macroeconomics is the study of the behaviour of the overall economy.
As defined by Joseph Stiglitz, our confidence in macroeconomics is, “the ability to maintain full employment, price stability, and sustained growth”.
Thus macroeconomics focuses on broad-based indicators of national economic performance, like GDP output, the balance of trade, and employment levels. Macroeconomics can be contrasted against microeconomics, which is the study of the economic behaviour of the individual firm and consumer. Traditionally, in the United States, the study of macroeconomics has had two main schools. Put simply, the Keynesian school of macroeconomics focuses on total demand and looks to both fiscal policy (government spending levels) and monetary policy (money supply growth) for solutions. The Monetarism school of macroeconomics rejects fiscal policy as a means of managing the economy and looks to monetary policy exclusively for answers. These major schools of macroeconomics have now developed offshoot and successor movements, such as New Keynesian Economics and New Classical Macroeconomics. Macroeconomics has major consequences for investors, as company earnings models are heavily dependent on growth in the overall economy, and bond (and, to a lesser extent, stock) prices are strongly determined by the level of interest rates.
For example, a macroeconomist might consider the industrial sector, the services sector, or the farm sector, but he/she will not consider specific parts of any of these sectors. Factors studied include inflation, unemployment, and industrial production, often with the aim of studying the effect of government policy on these factors.
Growth
Growth in this context refers to the economy’s capacity to produce goods and services. This is examined across the short, medium, and long run.
Aggregate Supply/Demand
The aggregate supply-aggregate demand model identifies both the price level and output level in an economy that is in equilibrium. This is a key concept to understanding macroeconomics. This is not the same as the usual supply and demand models from microeconomics.
You should try and do a good study on macroeconomics to find the best way for you to proceed in the future.
I chose to study macroeconomics in college because I wanted to know what caused episodes like the great depression and the recent recession.
My boss is an expert on macroeconomics and believes that the lack of trade between the United States and Cuba will lead to a depression in Cuba.
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Joseph Stiglitz
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This glossary post was last updated: 22nd November, 2021 | 0 Views.