In macroeconomics, we are looking at the economy at a high elevation, and trying to understand how certain large-scale ‘economic factors’ work and interact with one another in an economy or even across economies. These ‘economic factors’ include:
- Gross Domestic Product (GDP)
- Economic Growth
In short, macroeconomics is the study of how large scale economic factors such as inflation, GDP, economic growth unemployment behave in an economy.
Through a good understanding of how these factors work, macroeconomists are continually formulating theories and models that can better answer questions such as: Why an economy can at times experience business cycles? How does inflation and unemployment affect the economy? Why are some economies growing faster than others?
The government and monetary authority are also interested in these answers, as it can enable them to better formulate policies that can create jobs and growth. More specifically, they have four main objectives in mind:
- Sustainable economic growth;
- Low level of employment;
- Low and stable rate of inflation;
- equitable distribution of income
At the end of the day, macroeconomics is important because it affects you and me. Through a good understand of this field, we can become more connected and aware of our own economy – we can gain an understanding of where it is now, and where it is heading. In the process, we can become more prepared to ride through the current hardships, or even cease tomorrow’s opportunities.
The following is a list of key topics in Macroeconomics – click on the relevant text to find out more.