According to the modern economists there are mainly two approaches to the study of the science of economics viz Micro economic approach and Macroeconomic approach. [Formerly the two approaches were known as Price Theory and Income Theory].
The study of macroeconomics attracted greater attention after the great depression of 1929.
The terms Micro economics and Macro economics were coined by Ragner Frish of the Oslo University of Norway in the 1933, have now become a universal phenomenon adopted by all economists all over the world. This division of economic theory into two separate parts has gained much importance.
In recent years, macroeconomics has emerged as the most challenging and fascinating branch of economics. The classical economists like Adam Smith, Robert Malthus, David Ricardo etc studied economic parameters from the view point of the economy as a whole but they did not develop any coherent macroeconomics theory or model.
The foundation of macroeconomics, as a separate branch of economics was laid down by a British economist Lord John Maynard Keynes. Macroeconomic analysis acquired its significance due to the writings of Lord John Maynard Keynes who put forward a general theory of income and employment. His epoch making book “The General Theory of Employment, Interest and Money” published in 1936, in fact, produced a fundamental and drastic change in economic thinking. His Macro economic analysis was revolutionary. The hyper inflation after World War I and the Great Depression of 1930’s were mainly responsible for the development of macroeconomic approach. Therefore the post second world war has witnessed a dominance of Macroeconomic analysis over micro economic analysis.