Macroeconomics is an aspect of economic study that focuses on the aggregate economic system; Macroeconomics analyzes the economy at a national (or even global) level and is concerned with the economy as a whole. Within macroeconomics there are several schools of thoughts. Each school of thought has unique beliefs and theories about the economy. While each school of thought interprets data differently, each one studies the same characteristics.
All macro economist analyze several factors in order to discover the patterns and trends that influence the economy as a whole. Some of these factors are: the inflation (or deflation) rate, the unemployment rates, gross domestic product, and the unemployment rate, gross domestic product, and many others. For example, macroeconomics would analyze the change in GDP and unemployment rate to help determine the future direction of the whole economy.
Generally, macroeconomics focuses on two areas of study of those factors that influence the economy in t he short run, and the study of the factors that will have an impact on long term economic growth. In other words, economist are constantly studying those factors that influence the ebb and flow of the business cycle, and those factors that are actually adding to (or detracting from) overall economic achievement and growth. After analyzing data, macro-economist begin to recognize economize economic principles and develop theories and models.
Both Governments and businesses these models as they develop economic policies that will govern production. Economic theories are constantly changing. As economists observe economic behaviour, certain ideas are added or dropped from theories, or a whole new theory may even be developed. While some commonalities exist between theories, it seems that both economists and politicians have trouble agreeing on any one theory.
The theory covers the following aspects:
1. Theory of income and employment: Macro-economics studies what factors and how these factors determine the level of income and employment. The level of income and employment is determined by aggregate demand. Aggregate demand is the sum of total investment demand. Hence, consumption function and investment function are the important components of macro-economics. The theory of trade cycle is also covered by macro-economics.
2. Theory of general prices level: Macro-economics is concerned with how general price level is determined. The main aspect of general prices level is inflation. There are many theories of inflation, one of the grave problem of preset world, is also an important component of micro-economics. The theories of money, banking and finance also fall under macro-economics.
3. Theory of economic growth: Growth economics or the theory of economics growth is another important b ranch of macro-economics. Many theories of economies growth have been developing. These theories suggest the way to accelerate the rate of growth of the economics. It is because economic growth is a prerequisite for the improvement in the levels of living of people and alleviation of poverty.
4. Modern theory of distribution: National income is distributed among different classes of people of a country in different ways. Micro-economics studies what factors and how these factors determine the relative share of different of people national income. M. Kaleckly and Nicholas Kaldor developed the modern theory of distribution called macro-economics theory distribution. Kalecky believed that the relative share of the wages and profit depend on the degree of monopoly in the economy. Similarly, Kaldor believed that the relative share of the wages and profit depend on consumption function and the rate of investment.
Macro-Economics is macro because Macroeconomics is the branch of economies that deals with the performance, structure, behaviour and decision-making of the entire economy (country, continent or the world at large).
REFERENCE
Advance economics theory (2009) revised edition M.L JHINGAN
