Macro Economics

Macro Economics:

Historical Review of Macro Economics :

Macro Economics did exist in the past before the evolution of Micro Economics. In the 16th and 17th century, followers of Mercantilists (a group of English merchants) advocated policies to the government which were based on macro approach. In the 18th century, Physiocrats (French Thinkers) tried to analyse the concept of national income and wealth. Even the Classical Economic theories of Prof. Adam Smith, Prof. Ricardo and Prof. J. S. Mill discussed the determination of national income and wealth. But their macro analysis was combined with micro analysis. Thus, micro analysis ruled the world of economics till the Great Depression of 1930s. After the Great Depression, Lord John Maynard Keynes published his famous book the "General Theory of Employment, Interest and Money" in 1936. Keynes used macro economic approch to analyse economic problems. The credit for the development of macro economic approach goes to Lord Keynes. Besides Keynes, Malthus, Wicksell, Walras, Irving Fisher are other economists who have contributed to the development of macro economics.

Meaning of Macro Economics :

Macro economics is the branch of economics which analyses the entire economy. It deals with the total employment, national income, national output, total investment, total consumption, total savings, general price level interest rates, inflation, trade cycles, business fluctuations etc. Thus, macro economics is the study of aggregates.

Definitions of Macro Economics :

1) J. L. Hansen -

“Macro economics is that branch of economics which considers the relationship between large aggregates such as the volume of employment, total amount of savings, investment, national income etc.”

2) Prof Carl Shapiro -

“Macro economics deals with the functioning of the economy
as a whole."

• Kenneth Boulding's definition of Macro Economics