Macro Economics-Meaning and Features | Class 12 | Class 11

Meaning of Macroeconomics-

The term "Macroeconomics" is a combination of two words "Makros" and "Economics". The term Macro is derived from the Greek word “Makros” which means large.

Macroeconomics is a study of aggregates. 

It is the branch of economics, which studies the behaviour of all economics units combined together. Microeconomics deals with the study of an individual economic unit. 

To make it simple, let's take the example of "Demand Analysis". Microeconomics deals with the study of Individual Demand (demand of an individual consumer) whereas macroeconomics deals with the study of Aggregate (Total) Demand. Aggregate Demand is the sum of the demands of all individuals in the economy.

Look at it this way:

Microeconomics is the study of individual trees, whereas macroeconomics is the study of forest as a whole.

Definition: -

“Macroeconomics deals not with individual quantities as such, but with aggregates of these quantities; not with individual incomes but with the national incomes; not with individual prices but with the price level; not with individual outputs but with the national output".

Features of macroeconomics are as follows:-

1. Study of aggregates: - Macroeconomics involves the study of the nation's economy as a whole. It is a study of economy-wide aggregates such as aggregate demand, aggregate supply, total employment, total investment, total consumption, etc.

2. Lumping method: - Macroeconomics uses the lumping method. In this method, economic units are lumped together and studied. For example, national income, aggregate demand etc. Individual units are ignored.

3. General equilibrium analysis: - Macroeconomic analysis is based on General Equilibrium Analysis. General equilibrium analyzes the economy as a whole, rather than analysing single markets. This analysis deals with the entire economy in the context of equilibrium. 

4. Income analysis: - Macroeconomics is also referred to as the theory of income and employment or simply income analysis. This is because the basic subject matter of macroeconomic analysis is to explain what determines the level of national income & employment and what causes fluctuations in them. It also explains the growth of national income over a long period of time.

5. Policy-oriented: - According to prominent economist Keynes, Macro-Economics is a policy-oriented science. Macro-Economics analysis is useful in formulating suitable economic policies to promote economic growth, to control inflation, to generate employment, to pull the economy out of recession etc.

6. Dynamic science: - Macro-Economics studies the changes in aggregate economic variables (like aggregate demand, aggregate supply, etc.) and analyses the dynamic nature of the economy. It helps us to study the progress of an economy over a period of time