Definition of Macroeconomics

The word macroeconomics is

the combination of two words first
one Greek prefix makro meaning
"large" and second one economics.
Macroeconomics is the branch of
economics that deals with the
structure, performance, behavior,
and decision-making of the whole,
or aggregate, economy, instead of
focusing on individual markets. For
example : National income and
Inflation.
Circular Flow of Macroeconomics
 Goals of Macroeconomics
Microeconomics is a subdivision of
economics that studies how people,
firms and households decide on how to
allocate their limited resources in the
markets. Three conditions of the mixed
economy that are most important for
macroeconomics, including full
employment, stability, and economic
growth, that are generally desired by
society and pursued by governments
through economic policies.
Considering everything there are five
major goals of macroeconomics.
 Goals of Macroeconomics
1) FULL EMPLOYMENT : Full
employment is an economic
situation in which all available
labor resources are being used in
the most efficient way possible.
Full employment embodies the
highest amount of skilled and
unskilled labor that can be
employed within an economy at
any given time. Any remaining
unemployment is considered to be
frictional, structural or voluntary.
 Goals of Macroeconomics
2) PRICE STABILITY : Price
stability is the stable level of
prices in the economy, which
avoids long periods of inflation
or deflation and sustains the
value of money over time. Price
level stability is important for
savers. Price level stability
enables consumers to identify the
relative prices of goods and
services
 Goals of Macroeconomics
3) ECONOMIC GROWTH :
Economic growth is an increase in
the the production of economic
goods and services, compared from
one period of time to another. It can
be measured in nominal or
realnterms. Traditionally, aggregate
economic growth is measured in
terms of gross national product or
gross domestic product (GDP),
although alternative metrics are
sometimes used.
 Goals of Macroeconomics
4) EQUITABLE DISTRIBUTION OF
INCOME : Equitable distribution of
income ensures distributing welfare to
ensure fairness and allowing members
of the economy to have the same
opportunity to accumulate wealth. The
Government redistributes tax revenue
to ensure equitable distribution of
wealth. Low income earners should
receive an adequate amount of support
that assists in cost of living pressures
but does not compromise on reducing
the incentive to work and accumulate
wealth.
 Goals of Macroeconomics
4) AGGREGATE DEMAND
AGGREGATE SUPPLY :
Total quantity of output
demanded. Total quantity of
output supplied. Total demand
for goods and service. Total
supplied for goods and
service.