We explain what macroeconomics is and the variables it studies. Also, the origin of the macroeconomic approach and the topics it covers.
What is macroeconomics?
Macroeconomics is understood as an approach to economic theory that studies the global indicators of the economic process emphasizing global variables such as:
- Total amount of goods and services produced.
- Total income.
- Total level of employment.
- Level of productive resources.
- Balance of payments level.
- Exchange rate.
- General behavior of prices.
That is, it is a comprehensive approach to the economy, contrary to the individual approach by economic agent that microeconomics proposes.
The macroeconomics fixes your interest in local, regional or global economies paying special attention to indicators with high political and daily life impact, which allows us to understand the complex phenomena of economic and financial stability that intervene in the region.
For this, the macroeconomic approach uses measurements, statistics, and macromagnitudes that offer a general approximation to various economic segments, such as the Gross Domestic Product (GDP), the Interest Rate or the Unemployment Rate.
The origin of this particular approach can be traced back to 1936, the year in which the British John Keynes published his General theory of employment, interest and moneya fundamental work in the history of the Western economy, as it contained an explanation of the so-called Great Depression of the 1920s.
The virtue of Keynes's study, beyond that, was to break with the tradition of previous economists who accepted business cycles as inevitable. According to him, fiscal and monetary policy could be used as tools to combat unemployment, thus generating an increase in production and stopping the economic disaster. From then on, macroeconomics was considered a vital tool in guiding the destiny of nations .
Macroeconomics Topics
Macroeconomics focuses its interest on a set of issues central to the economic performance of a region, of which the following stand out:
- Economic growth The analysis and control of the factors that allow the long-term increase in production, income or economic indicators of a given region.
- Labor market and unemployment Unemployment is one of the biggest concerns in this branch of the economy, which is why it requires appropriate strategies for measuring and understanding the phenomenon, in order to be able to address it correctly.
- International economy Globalization and international financial capital have interwoven the world's economies in such a way that few economic phenomena today lack repercussions on their neighbors or economic partners. In this sense, the study of the different international approaches to the economy is required, such as protectionism or exchange rates.
- Monetary policy Money control instruments are the main tools with which a country or a coalition of governments can confront the macroeconomic issue to influence production and employment.
