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macroeconomics

  (măk'rō-ĕk'ə-nŏm'ĭks, -ē'kə-) pronunciation
n. (used with a sing. verb)

The study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors.

macroeconomic mac'ro·ec'o·nom'ic adj.
macroeconomist mac'ro·e·con'o·mist (-ĭ-kŏn'ə-mĭst) n.
 
 
Investment Dictionary: Macroeconomics

The field of economics that studies the behavior of the aggregate economy. Macroeconomics examines economy-wide phenomena such as changes in unemployment, national income, rate of growth, gross domestic product, inflation and price levels.

Investopedia Says:
Macroeconomics is focused on the movement and trends in the economy as a whole, while in microeconomics the focus is placed on factors that affect the decisions made by firms and individuals. The factors that are studied by macro and micro will often influence each other, such as the current level of unemployment in the economy as a whole will affect the supply of workers which an oil company can hire from, for example.

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Banking Dictionary: Macroeconomics

Analysis of a nation's economy as a whole, examining aggregate data, such as inflation, industrial production, price levels, and unemployment. Contrast with microeconomics, the analysis of business sectors and industry groups.

 
Political Dictionary: macroeconomics

The branch of economics which deals with aggregates such as capital and labour, and their interactions in an economy as a whole. Politics everywhere is deeply affected by changes in macroeconomic variables such as inflation, unemployment, and the exchange rate. Some writers have developed ‘political business cycle’ models which aim to predict the popularity of the government from the current or recent (‘lagged’) values of these variables.

 

Study of the entire economy in terms of the total amount of goods and services produced, total income earned, level of employment of productive resources, and general behaviour of prices. Until the 1930s, most economic analysis focused on specific firms and industries. The aftermath of the Great Depression and the development of national income and production statistics brought new interest to the field of macroeconomics. The goals of macroeconomic policy include economic growth, price stability, and full employment. See also microeconomics; national income accounting.

For more information on macroeconomics, visit Britannica.com.

 
Economics Dictionary: macroeconomics

The part of economic theory that deals with aggregates, such as national income, total employment, and total consumption. (Compare microeconomics.)

 
Veterinary Dictionary: macroeconomics

Study of an economy as a whole; includes the total or aggregate level of output of an economy and prices for the economy, viewed as a whole. See also microeconomics.


 
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Wikipedia: macroeconomics
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Macroeconomics is a branch of economics that deals with the performance, structure, and behavior of a national economy as a whole.[1] Macroeconomists seek to understand the determinants of aggregate trends in an economy with particular focus on national income, unemployment, inflation, investment, and international trade. In contrast, microeconomics is primarily focused on the determination of prices and the role of prices in allocating scarce resources.[1]

While macroeconomics is a broad field of study, there are two areas of research that are emblematic of the discipline: The attempt to understand the causes and consequences of short-run fluctuations in national income (the business cycle), and the attempt to understand the determinants of long-run economic growth (increases in national income).

Macroeconomic models and their forecasts are used by both governments and large corporations to assist in the development and evaluation of economic policy and business strategy.

Origin

The first published use of the term "macroeconomics" was by the Norwegian Economist Ragnar Frisch in 1933[2] and before this, there already was an effort to understand many of the broad elements of the field.

Until the 1930s, most economic analysis did not separate out individual behaviour from aggregate behavior. With the Great Depression of the 1930s and the development of the concept of national income and product statistics, the field of macroeconomics began to expand. Before that time, comprehensive national accounts, as we know them today, did not exist. Theoretically, the ideas of the British economist John Maynard Keynes, who worked on explaining the Great Depression, were particularly influential.

One of the challenges of economics has been a struggle to reconcile macroeconomic and microeconomic models. Starting in the 1950s, macroeconomists developed micro-based models of macroeconomic behavior, such as the consumption function. Dutch economist Jan Tinbergen developed the first comprehensive national macroeconomic model, which he first built for the Netherlands and later applied to the United States and the United Kingdom after World War II. The first global macroeconomic model, Wharton Econometric Forecasting Associates LINK project, was initiated by Lawrence Klein and was mentioned in his citation for the Nobel Memorial Prize in Economics in 1980.

Theorists such as Robert Lucas Jr suggested (in the 1970s) that at least some traditional Keynesian (after John Maynard Keynes) macroeconomic models were questionable as they were not derived from assumptions about individual behavior, but instead based on observed past correlations between macroeconomic variables. However, New Keynesian macroeconomics has generally presented microeconomic models to shore up their macroeconomic theorizing, and some Keynesians have contested the idea that microeconomic foundations are essential, if the model is analytically useful. An analogy might be, that the fact that quantum physics is not fully consistent with relativity theory does not mean that relativity is false. Many important microeconomic assumptions have never been proved, and some have proved wrong.

The various schools of thought are not always in direct competition with one another, even though they sometimes reach differing conclusions. Macroeconomics is an ever evolving area of research. The goal of economic research is not to be "right," but rather to be useful.[citation needed] An economic model should accurately reproduce observations beyond the data used to calibrate or fit the model. None of the current schools of economic thought perfectly capture the workings of the economy, however each approach contributes a unique perspective to the overall puzzle. As one learns more about each school of thought, it is possible to combine aspects of each in order to reach an informed synthesis.

Analytical approaches

The traditional distinction is between two different approaches to economics: Keynesian economics, focusing on demand; and supply-side (or neo-classical) economics, focusing on supply. Neither view is typically endorsed to the complete exclusion of the other, but most schools do tend clearly to emphasize one or the other as a theoretical foundation.

  • Keynesian economics focuses on aggregate demand to explain levels of unemployment and the business cycle. That is, business cycle fluctuations should be reduced through fiscal policy (the government spends more or less depending on the situation) and monetary policy. Early Keynesian macroeconomics was "activist," calling for regular use of policy to stabilize the capitalist economy, while some Keynesians called for the use of incomes policies.
  • Supply-side economics delineates quite clearly the roles of monetary policy and fiscal policy. The focus for monetary policy should be purely on the price of money as determined by the supply of money and the demand for money. It advocates a monetary policy that directly targets the value of money and does not target interest rates at all. Typically the value of money is measured by reference to gold or some other reference. The focus of fiscal policy is to raise revenue for worthy government investments with a clear recognition of the impact that taxation has on domestic trade. It places heavy emphasis on Say's law, which states that recessions do not occur because of failure in demand or lack of money.

Schools

  • Austrian economics is a laissez-faire school of macroeconomics. It focuses on the business cycle that arises from government or central-bank interference that leads to deviations from the rate of interest, and emphasizes the importance of credit and investment misallocation in business cycle fluctuations.
  • Monetarism, led by Milton Friedman, holds that inflation is always and everywhere a monetary phenomenon. It rejects fiscal policy because it leads to "crowding out" of the private sector. Further, it does not wish to combat inflation or deflation by means of active demand management as in Keynesian economics, but by means of monetary policy rules, such as keeping the rate of growth of the money supply constant over time.
  • New classical economics. The original theoretical impetus was the charge that Keynesian economics lacks microeconomic foundations -- i.e. its assertions are not founded in basic economic theory. This school emerged during the 1970s. This school asserts that it does not make sense to claim that the economy at any time might be "out-of-equilibrium". Fluctuations in aggregate variables follow from the individuals in the society continuously re-optimizing as new information on the state of the world is revealed. A neo classical economist would define macroeconomics as dynamic stochastic general equilibrium theory, which means that choices are made optimally considering time, uncertainty and all markets clearing.
  • New Keynesian economics, which developed partly in response to new classical economics, strives to provide microeconomic foundations to Keynesian economics by showing how imperfect markets can justify demand management.
  • Post-Keynesian economics represents a dissent from mainstream Keynesian economics, emphasizing the role of uncertainty, liquidity preference and the historical process in macroeconomics.

Macroeconomic Policies

In order to try to avoid major economic shocks, such as great depression, governments make adjustments through policy changes which they hope will succeed in stabilizing the economy. Governments believe that the success of these adjustments is necessary to maintain stability and continue growth. This economic management is achieved through two types of strategies.

References

  1. ^ a b Mark Blaug (1985). Economic theory in retrospect. Cambridge, UK: Cambridge University Press. ISBN 0-521-31644-8. 
  2. ^ Ragnar Frisch (1933). Propagation Problems and Impulse Problems in Dynamic Economics. In Economic Essays in Honour of Gustav Cassel. London: Allen and Unwin. 

Brian Snowdon, Howard R. Vane,. Modern Macroeconomics: Its Origins, Development And Current State. Edward Elgar Publishing. ISBN 1-84376-394-X. 

See also


 
Translations: Translations for: Macroeconomics

Dansk (Danish)
n. - makroøkonomi

Nederlands (Dutch)
macro-economie

Français (French)
n. - macroéconomique

Deutsch (German)
n. - Volkswirtschaftslehre

Ελληνική (Greek)
n. pl. - (οικον.) μακροοικονομική επιστήμη

Italiano (Italian)
macroeconomia

Português (Portuguese)
n. pl. - macroeconomia (f)

Русский (Russian)
изучение экономики с точки зрения целых систем

Español (Spanish)
n. - macroeconomía

Svenska (Swedish)
n. pl. - makroekonomi

中文(简体) (Chinese (Simplified))
总体经济

中文(繁體) (Chinese (Traditional))
n. pl. - 總體經濟
n. - 總體經濟

한국어 (Korean)
n. pl. - 거시 경제학
n. - 거시 경제학

日本語 (Japanese)
n. - マクロ経済学, 巨視的経済学

العربيه (Arabic)
‏(الجمع) اقتصاد كلي‏

עברית (Hebrew)
n. - ‮כלכלה (מנקודת ראות רחבה-כוללת)‬


 
 

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Dictionary. The American Heritage® Dictionary of the English Language, Fourth Edition Copyright © 2007, 2000 by Houghton Mifflin Company. Updated in 2007. Published by Houghton Mifflin Company. All rights reserved.  Read more
Investment Dictionary. Copyright ©2000, Investopedia.com - Owned and Operated by Investopedia Inc. All rights reserved.  Read more
Banking Dictionary. Dictionary of Banking Terms. Copyright © 2006 by Barron's Educational Series, Inc. All rights reserved.  Read more
Political Dictionary. The Concise Oxford Dictionary of Politics. Copyright © 1996, 2003 by Oxford University Press. All rights reserved.  Read more
Britannica Concise Encyclopedia. Britannica Concise Encyclopedia. © 2006 Encyclopædia Britannica, Inc. All rights reserved.  Read more
Economics Dictionary. The New Dictionary of Cultural Literacy, Third Edition Edited by E.D. Hirsch, Jr., Joseph F. Kett, and James Trefil. Copyright © 2002 by Houghton Mifflin Company. Published by Houghton Mifflin. All rights reserved.  Read more
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Wikipedia. This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia article "Macroeconomics" Read more
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