What is the definition of macroeconomics?

Answer 1

Definitions of Macroeconomics

"Macroeconomics is that part of economics which studies the overall averages and aggregates of the system." (Kenneth Boulding)

"Macroeconomics deals with the functioning of the economy as a whole." (Carl Shapiro)

The Scope of Macroeconomics

This includes the use of economic resources at the national level. Theses resources have their effect on the national income, employment, effective demand, aggregate saving, aggregate investment, price level, economic development etc. of the country. Its scope can be divided into following parts:

1. Theory of National income: Macroeconomics studies the concept of naational income , its diffferent elements, methods of measurement and social accounting.

2. Theory of Employment: Macroeconomics also studies problems relating to employment and unemployment. It studies different factors determining the level of employment, viz, effective ddemand, aggreagte supply, aggregate consumption, aggregate investment, aggregate saving, multiplier, etc.

3. Theory of money: Changes in demand for, and supply of money have considerable effect on the level of employment. Macroeconomics therefore, studies functions of money and theries relating to it. Banks and financial institutions are also studied under macroeconomics.

4. Theroy of general price level: Determination of and changes in general price level are also studied under macroeconomics. Problems concerning inflation or general rise in prices and deflation or general fall in prices are also studied under macroeconomics.

5. Theory of Economics Growth: Study of problems relating to economic growth or increase in per capita real income forms part of macroeconomics. It studies the economic growth of under developed economies. Monetary and fiscal policies of government are also studied under therein.

6. Theories of international Trade: Macroeconomics also studies trade among different countries. Theories of international trade, tariff, protection, etc., are subjects of great significance to macro economics.