We explain what macroeconomics is and the variables it studies. In addition, 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 process economic, emphasizing global variables such as:
- Total amount of goods and services produced.
- Total of income.
- Total level of employment.
- Level of productive resources.
- Balance of payments level.
- Exchange rate.
- General behavior of prices.
That is to say, it is an overall approach to the economy, contrary to the individual approach by economic agent proposed by the microeconomics.
Macroeconomics sets its interest in local, regional or global economies, paying special attention to indicators of high political impact and in daily life, 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 macro-figures 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, when the British John Keynes published hisGeneral Theory of Employment, Interest, and Money, fundamental work in the history of the economy from the West, 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 a rise in production and tackling the economic collapse. From then on, macroeconomics was considered a vital tool in guiding the destiny of the nations.
Macroeconomics issues
Macroeconomics focuses its interest on a set of central issues for the economic performance of a region, of which the following stand out:
- Economic growth. The analysis and control of the factors that allow to increase in the long term the production, the income or the economic indicators of a determined region.
- Labor market and unemployment. Unemployment is one of the major concerns in this branch of the economy, so it requires strategies adequate measurement and understanding of the phenomenon, to be able to tackle it correctly.
- International economy. The globalization and the capital International finance has 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, such as protectionism or exchange rates, is required.
- Monetary policy Money control instruments are the main tools with which a country or a coalition of governments They can face the macroeconomic issue to influence production and employment.