Posted in Finance, Accounting and Economics Terms, Total Reads: 394
Macro origins from the word makro that means something large or big. Macroeconomics and Microeconomics are the two main branches of economics. Macroeconomics is the branch of economics that deals with the working of the overall economy and not focus on individual markets or sectors or companies. It deals with the structure, policy decisions and its impact, inflationary movements and its effects, decision making of the government and the speed of implementation etc.
Macroeconomists study various factors and find links between them to generate an outlook about the future of the economy. Factors like Inflation, GDP, jobless data, price indexes, saving rate in the economy, Export and Import data, international finance and the money market movements, trends in the international markets etc play out in the drawing boards of Macroeconomists.
It should be duly noted that the macroeconomic factors are directly linked with the microeconomic factors. A change in Macros will definitely have an impact on the micro factors. A simple example is that current level of unemployment in a particular economy will have an impact on the number of skiled laborers that shall be available for setting up of a new steel plant.
Macroeconomics covers a very important aspect of the economy- the demand-supply situation in the overall market. The Demand-Supply is one of the biggest determinants of the price movement of any good or service or a commodity.
Macroeconomists always try to find the causes that have an impact on the economy and also keep an eye for short term changes that have the potential to change the Macros for an economy-bot in short term and long term.