What is Macroeconomics?

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Economics can be classified in to two groups, namely macroeconomics and microeconomics. Macroeconomics examines the performance, behavior, decision making and structure of an economy as a whole. Global, national and regional economics fall under the category of macroeconomics.

Macroeconomics deals with price indices, GDP, unemployment and other such aggregated indicators. Factors such as employment rate, inflation, investments, savings, national income, consumption, output, international finance and trade are studied when macroeconomics comes into consideration. Microeconomics, on the other hand, generally deals with the actions of individual agents of the economy, such as firms, households, per capita income, consumer behavior, market prices and elasticity of prices of goods. Though macroeconomics is a much broader field than microeconomics and encompasses larger scales in term of the economy, they are both interlinked.

There are many theories of macroeconomics, but they usually somehow or the other relate to unemployment, inflation and the phenomena of output. Fiscal policy and monetary policy are two important tools of macroeconomics. These policies give a push to the economy by providing it with a boost in the level of GDP and employment.

Macroeconomics looks upon the larger picture of the economy and helps someone to understand the financial and economical developments of a region. Whether a country is developed, underdeveloped or developing can be analyzed with the help of macroeconomics. Many researches, surveys, etc. are made to analyze these issues.

Output and income are important factors of macroeconomics; they generally deal with national output and GDP. Unemployment is another important factor affecting macroeconomics. This is determined as the percentage of workers who do not have a job but are a part of the labor force. Inflation and deflation also are important factors; a general increase in price of goods and services is denoted as inflation, whereas a fall or decrease in price is referred to as deflation. All these factors help macro-economists study the economic growth of a country or region.

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