What Is Macroeconomics?, The Clairifiers

 WHAT IS MACROECONOMICS?

The prefix 'macro' is derived from the Greek word 'makros', meaning 'large'. Macroeconomics is the study of the economy as a whole. The unit of study in macroeconomics is the entire economy rather than a part of it. Macroeconomics deals with the problems faced by the entire economy. Thus macroeconomics deals with the functioning of the economy as a whole For example, macroeconomics seeks to explain how the economy's total output of goods and services and total employment of resources are determined and what explains the fluctuations in the level of output and employment. Macroeconomics explains why sometimes the economy is operating at near-about full employment level and why, at some other times, there is a high degree of unemployment; why sometimes there is full utilisation of the economy's productive capacity and why at some other times there is underutilisation of the economy's productive capacity. It also seeks to explain why sometimes the economy experiences a high rate of economic growth and a lower rate of economic growth at some other times; why sometimes the economy faces the problem of a sharp rise in prices, i.e., problem of inflation, and why at some other times the price level remains stable or even falls. In short, macroeconomics deals with the broad economic aggregates or 'bigger' issues, such as full employment or unemployment, full capacity or undercapacity production, a low or high rate of growth, inflation or deflation. In other words, macroeconomics is concerned with the theory of national income, employment, aggregate consumption, savings and investment, general price level, economic growth, etc.

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