The term ‘macro’ was first used in economics by Ragner Frisch in 1933. But as a methodological approach to economic problems, it originated with the mercantilists in the 16th and 17th centuries. They were concerned with the economic system as a whole. From the 18th century physiocrats to modern economists have contributed to the development of macro economic analysis. But credit goes to Keynes who finally developed a general theory of income, output and employment in the wake of the great depression.
Macro economic is concerned with aggregates and averages of the entire economy. Such as national income, output, total employment, total consumption etc. In other words, macro economics studies how the aggregates and averages of the economy as a whole are determined and what causes fluctuations in them.
Macro economics has been defined in various ways, they are:
“Macro economic theory is the theory of income, employment, prices and money”.
Macro economics is,” that part of economics which studies the overall averages and aggregates of the system”.
Macro economics is,” the study of the forces of factors that determine the levels of aggregate production, employment and prices in an economy and their rates of change over time”.
Nature of Macro Economics
Macro economics is the study of aggregates or averages covering the entire economy, such as, total employment, national income, national output, total investment, total consumption, total savings, aggregate supply, aggregate demand, and general price-level, wage level and cost structure. In other words, it is aggregate economics which examines the interrelations among the various aggregates, their determination and causes of fluctuations in them.
Macro economics is also known as the theory of incomes and employment, or simply income analysis. It is concerned with the problems of unemployment, economic fluctuations, inflation or deflation. International trade and economic growth.
It is the study of the causes of unemployment, and the various determinants of employment.
In the field of business cycles it concerns itself with the effect of investment on total output, total income, and aggregate employment.
In the monetary sphere it studies the effect of the total quantity of money on the general price-level. In international trade, the problems of balance of payments and foreign aid fall within the purview of macroeconomics analysis.
Above all, macroeconomics theory discusses the problems of determination of the total income of a country and causes of its fluctuations.
Finally it studies the factors that retard growth and those which bring the economy on the path of economic development.
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