What is Meant by Macroeconomics?
Macroeconomics is a branch of economics that studies how the overall economy functions and economy wide phenomena such as inflation, Gross Domestic Product, unemployment, national income etc. Earlier work by Adam Smith and John Stuart Mill is considered to be a part of the domain of macroeconomics. But the first complete work on macroeconomics is from the works of John Maynard Keynes. In his seminal work, The General Theory of Employment, Interest, and Money in 1936, Keynes discusses the fallout from Great Depression and explains the failure of markets.
What are the Areas of Macroeconomic Research?
There are two main areas that are representative of the macroeconomics discipline. This includes long term economic growth and business cycle.
What are the Macroeconomic School of Thoughts?
Macroeconomics is divided into various schools of thought ranging from Classical school to the Keynesian school to the Monetarist school to the Neoclassical school.
What are the Limits of Macroeconomics?
Macroeconomic theories at times are often created in a vacuum and lacks certain a strong foot hold in real details. It is also difficult to extrapolate the information provided by these to accurately arrive at more than just mathematically analysis.
What is the Difference Between Macroeconomics and Microeconomics?
- Macroeconomics deals with the performance, structure, and behaviour of the entire economy. It focuses on the entire economy while taking a top-down approach to determine its course and nature. It is an analytical tool used to craft economic and fiscal policy and also ensures that economic resources are properly utilised.
- Microeconomics, on the other hand, is more focused on the choices made by individual actors such as individuals, households, industries, etc. Microeconomics focuses on supply and demand and other forces that determine price levels and this discipline is used by individuals to make decisions.
- These two are interdependent disciplines that complement one another.
