What is Macroeconomics?

Have you ever wondered why some people are unemployed, why prices rise over time, or why some countries are more prosperous? Macroeconomics helps us understand these things!

Macroeconomics studies the economy as a whole.

It analyzes large-scale economic trends such as inflation, unemployment, and economic growth.

Microeconomics is the study of individual economic agents like households and firms and how they make decisions in markets —for example, how a business sets prices or how an individual decides to spend their income. In contrast, macroeconomics focuses on broader issues, such as how an increase in taxation affects households across an entire economy or how government policies can promote economic growth that leads to higher living standards.

Policymakers use two key tools, monetary and fiscal policy, to manage these issues. For example, a country’s central bank uses monetary policy to adjust interest rates to control inflation. The government can also use fiscal policy to increase its expenditures on activities, such as funding infrastructure projects, to boost employment.

Understanding macroeconomics helps to see the bigger picture.