Meaning of macro economics

The term “macro” is derived from the Greek word “Makros” which means “large” Micro economics studies not the whole economy not a part of the economy. Macro economics is thus, the branch of economics which analyses the entire economy. It is concerned with the total employment, national income and its size and growth, national output, total investment, total consumption, total savings, general price level interest rates, inflation trade cycles, business fluctuations etc. It studies the interrelationship between total income, total investment, total consumption, total savings etc. How these aggregates are determined and what the causes of their fluctuation are. Micro economics is thus a study of aggregates.It deals with the aggregative behavior of the entire economy.

Macroeconomics incorporates theories of growth national income, aggregate employment, total consumption demand, aggregate investment level, level of private and government expenditure and the balance of international trade etc.

In other words, the determination of general equilibrium, ie equilibrium for the entire economy is an important tool of macroeconomic analysis. This is why macro economics is often called as the Theory of income and employment.

Posted in General Economics