Macroeconomics is the study of the performance and behavior of the larger groups in the economy as it involves study of overall national and international economy. It focuses on the study of problem of employment, GDP, investment, government fiscal & monetary policy, consumption, economic growth, level of inflation, recessions, depressions etc.


The word ‘Macro’ in the macroeconomics is derived from the Greek word ‘makros’ that means large. The study of macroeconomics focuses on overall economic phenomena, national income and how the large scale market systems behave and also helps to solve the problems that prevails in the economy such as unemployment, monetary problems, problems of inflation, economic fluctuations etc. The concept of macroeconomics assumes that the micro variables such as individual behavior on the price of goods & services, decisions of individual & firms etc. are constant. The area and scope of it is most vital and controversial as compared to the other fields of economics.

Major topics covered in macroeconomics are as follows:

  • Theory of income &employment
  • Theory of General price level & inflation
  • Theory of economic growth

Advantages of macroeconomics:

The advantages are as follows:

  1. From the study of macroeconomics, the overall view of the complexities of the economic system at the national and international level can be known.
  2. It helps in the analysis of the reasons of the economic fluctuations and after finding the reasons of the same, remedies can be provided.
  3. The focus of macroeconomics is on the problem of unemployment, illiteracy, poverty etc. Therefore, the study of macroeconomics helps in framing the policies and procedures to achieve the desired objectives so that the problems prevailing in the economy can be reduced.
  4. It involves evaluation of the national income of the economy which helps in understanding the income distribution among the various groups of people and also it helps in the anticipation of the level of fiscal activity in the economy.

Disadvantages of macroeconomics:

The disadvantages are as follows:

  1. It fails to consider the structural changes in the individual units as only the aggregate values are considered in microeconomics and the conclusions drawn on the basis of aggregate values are sometimes misleading.
  2. Macroeconomics decisions or plans & policies may have a negative effect on the desired goals and objectives of the individual units.
  3. Even most of the macro magnitudes used in the decision making is unreliable as it may consist of errors and ambiguities.

Final Thought:

Thus, macroeconomics deals with the economic theory that involves study of behavior of aggregates in the economy involving the aggregate demand and supply of the goods & services. The study of macroeconomics helps to understand the economy in terms of national income which consist of the knowledge that helps to get the idea about, how the income is distributed among the different sections of the society and what is the overall GDP (Gross Domestic Product) of the nation. Overall study of macroeconomics helps to frame the policies and programs that can solve the problems of unemployment, illiteracy, poverty etc.

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