What is Macroeconomics?


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Macroeconomics is the study of the economy as a whole – for example, of a country, a continent, or the entire world.

Understanding macroeconomics

Macroeconomics is a branch of social science that deals with the economy as a whole by examining key factors such as the unemployment rate, inflation rate, interest rates, and gross domestic product. Macroeconomics does not look at how an individual consumer or business behaves; that is microeconomics. Instead, it looks at aggregates. Macroeconomics seeks to understand the cumulative effect of the actions of all consumers and firms in an economy. Macroeconomics seeks to explain the underlying forces that affect the economy. A macroeconomic understanding of what drives the economy can help governments, businesses, banks, and other stakeholders make better-informed decisions.


Imagine that the morning news reports that the unemployment rate in the country is at an all-time low. The news report is a general look at the nation’s economy. The report doesn’t look at specific segments of the nation’s economy, such as the double-digit unemployment rates in specific industries, but at the overall economy. Thus, the news report takes a macroeconomic look at the nation’s economy.


Macroeconomics is like a national weather report…

Macroeconomics analyses conditions that affect an entire economy, just as a national weather report looks at meteorological trends that will affect weather across the country. Similar to how a national weather report looks at how conditions could lead to above or below average temperatures across the country, macroeconomics looks at how market forces are shifting on a large scale.

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