What is Macroeconomics?

Macroeconomics seems daunting, but with the right knowledge about basics, it immediately becomes easier.
by Yoaquim Boom
July 22, 2023

What is Macroeconomics?

Macroeconomics is the study of an economy's behavior and performance as a whole, rather than the separate pieces that make it up.

It examines aggregate variables like GDP, inflation, unemployment, and trade balance to see how they are connected and impacted by changes in government policy, international events, and other factors.

Macroeconomic policy aims to improve economic performance and stability by focusing on long-term economic growth, low unemployment, and low inflation.

Policymakers use a variety of tools to achieve these goals, including monetary policy (regulating the money supply and interest rates) and fiscal policy (managing government spending and taxation).

A number of factors, including global economic conditions and market expectations, as well as the structure and flexibility of the economy, may limit the success of these initiatives.

Macroeconomics (Investopedia)

10 Things Macroeconomics Deals With

  1. Macroeconomics: GDP - Gross Domestic Product, which measures the value of all goods and services produced within a country over a specific period of time.

  2. Macroeconomics: Inflation - The rate at which the general level of prices for goods and services is rising and subsequently, purchasing power of currency is falling.

  3. Macroeconomics: Employment - The percentage of the labor force that is unemployed but actively seeking employment, used as an indicator of the health of the economy

  4. Macroeconomics: Monetary policy - The actions taken by the central bank to control the supply of money and interest rates in an economy.

  5. Macroeconomics: Fiscal policy - The actions taken by the government through taxation and spending to influence the economy.

  6. Macroeconomics: International trade - The exchange of goods and services between countries, including imports and exports.

  7. Macroeconomics: Business cycle - The natural fluctuations of economic activity, such as periods of growth and recession, within an economy.

  8. Macroeconomics: National Income Accounting - A system of measuring the value of all economic activity within a country.

  9. Macroeconomics: Monetary aggregates - A measure of the total amount of money supply, such as M1 and M2, in an economy.

  10. Macroeconomics: International economics - The study of how countries interact with one another through trade and investment.

  11. Macroeconomics: Balance of payments - A record of all economic transactions between a country and the rest of the world over a certain period of time.

  12. Macroeconomics: Growth and development - The study of how economies grow over time, and how policies can affect economic growth and development.

There's ofcourse more, but these are a few key things macroeconomics deals wit on a day to day basis.