What is macroeconomics?

Macroeconomics  is considered to be one of the two main topics within economics, along with microeconomics.

Macroeconomics is the study of an economy as a whole and, as such, advocates an approach ” from  top down ” of the economic study.

The history of modern macroeconomics dates back to  John Maynard Keynes, a British economist, whose theories were very influential during the early  20th century.

Although some, both at the time and in later years, argued against Keynes’s ideas, for example, the Austrian-British economist  Friedrich August von Hayek, Keynes has remained a popular figure in the world of economics, and his Ideas have developed in new schools of thought, such as the Post Keynesian school.

Keynes had many ideas and theories, but one of the most enduring is that the economy is largely influenced by aggregate demand. As a result, Keynes was a staunch advocate of public spending, particularly in times of economic recession, to help  stimulate the economy  and promote economic growth.

Although Keynes is considered the modern founder of macroeconomic thought, there is much more to learn about macroeconomics than Keynes.

Fundamentally, macroeconomics studies key issues that  influence the economy as a whole, such as:

• The levels of employment or unemployment  in a country or around the world.
• Market failures and their consequences.
• Current tax policies around the world.
• The rate of inflation.

For this reason, macroeconomics can also play a crucial role in formulating a framework for  economic policies.  In fact, economists working for government agencies examine macroeconomic factors within the country to understand and assess which economic policies would be most beneficial to the country and the economy as a whole.

Economic policies influenced by macroeconomic analysis include:

• The  corporate tax rate in  effect for current and future years.
• Measures designed to  improve employment rates  and job stability across the country.
• Inflation measures and policies .

While macroeconomics plays a very important role in the study of economics, economics students must also understand the field of microeconomics and how it interacts with macroeconomics in order to have a  more complete picture  of what the study of economics entails.