Economics can be a difficult subject to study, regardless of whether you are studying the subject at GCSE, A-Level, or at a university. One of the main challenges of economics is that there are so many different terms and economic issues that students are expected to be familiar with.
Failure to understand these core economic concepts and any underlying principles of economics can lead to difficulty following classes and moreover can make your learning experience that much more taxing.
Luckily, there’s help at hand. The below article examines one of the most common terms you’ll encounter during your economics study – macroeconomics – and provides examples of where you may encounter macroeconomic policy.
Of course, if you still find yourself struggling to get to grips with the definition of macroeconomics, then there’s always extra support on hand through the help of a tutor, such as the economics tutors that are available for hire via Superprof.
As a general rule, macroeconomics is considered to be the study of the economy in aggregate. This means that macroeconomics takes a large-scale look at economic activity and examines how the economy as a whole behaves and operates.
Although there are other areas of economics you can study, such as how an individual’s behaviour can influence economic outcomes, such studies belong to the areas of microeconomic analysis or behavioural economics, and so are not generally considered within macroeconomics.
However, microeconomics – a “bottom-up” study of economics and the economy, with a focus on individuals or companies – is not mutually exclusive from macroeconomics. Often, issues that concern macroeconomics, such as unemployment in an economy or wages, will also interest economists specialising in microeconomics, although they may look at the issue from a slightly different perspective.
If you’re looking for a more specific definition of macroeconomics, then there are a variety of sources and economists that you can turn to for clarification.
For instance, take John Maynard Keynes, who is considered to be the father of modern macroeconomics and is mentioned in many an economics textbook. In one of his most famous works, “The General Theory of Employment, Interest and Money” and in subsequent writings, Keynes argued that economic output is influenced by factors such as aggregate demand, which could be improved by stimulating government spending as well as by lowering taxes.
These thoughts laid the foundation for macroeconomics as we know it today, and spawned Keynesian economics, which is a particular school of economic thought.
Although not every economist is a fan of Keynes’ ideas, their influence was widely felt throughout the twentieth century, and there are still proponents of his theories today, most commonly under the school of new-Keynesianism.
Of course, macroeconomics is not just an economic theory, as it has also shaped a number of different economic models and policies, which are examined in further detail below.
Macroeconomic factors can explain changes, both positive and negative, to a nation’s economy. (Source CC0 1.0, Gresham College, Flickr)
Given the definition of macroeconomics, it makes sense that the main features of macroeconomics relate to areas that impact the economy as a whole. As a result, macroeconomic areas of concern usually relate to policies concerning topics such as:
However, there are a variety of items that can have a huge impact on the economy and so would fall within the remit of macroeconomic study, so macroeconomic analysts are not confined to examining the areas listed above.
For example, there are a variety of macroeconomic factors that may have positive or negative effects on an economy. For example, natural disasters, such as the recent volcano eruptions in Hawaii, can be considered to be negative macroeconomic factors, as they have a downward effect on a local or national economy.
This can be due to many reasons, including a depletion of natural resources, destruction of places of work or factories, or a displaced population.
Another example of a negative economic factor is the recent global financial crisis, which began in the U.S.A. in 2007. The crisis led to economic downturns across the globe and is a key example of how macroeconomic factors do not always bring positive changes to an economy.
There are also a number of factors which can be positive for an economy. For example, reducing the costs of goods and services can lead to increased demand for that service or product. Over time this should lead to increased revenue for those suppliers, and hopefully, the economy at large.
The financial crisis in 2008 is a great example of what a student of macroeconomics might learn about. (Source: CC0 1.0, geralt, Pixabay)
There are many examples of macroeconomic policy the world over, and the more you look for it, the easier it becomes to find examples of such policies.
Broadly speaking, those that study macroeconomics examine one of two areas in the economy. For example, economists either study the business cycle, which looks at the cyclical nature of the production of goods and services. Usually, the performance of a business cycle is measured through GDP.
Alternatively, macroeconomists tend to study what drives growth in the economy. Both methods of study keep to the core tenants of macroeconomics, namely, examining the factors that influence the economy in the aggregate.
Macroeconomics is a hugely important area when it comes to setting policy objectives and measures, whether those policies are set by international bodies or governments. Such policies are aimed at encouraging growth within an economy, or to curb any slowdown that an economy may face.
Often, policies that are likely to have been influenced by macroeconomics include items such as:
Of course, analysis of macroeconomic factors does not in itself dictate what economic, fiscal, or monetary policies that a government may adopt. Naturally, governments are often elected with a particular mandate, and so the policies that they introduce during their time in power may well represent their own political priorities and beliefs.
For this reason, there can often be disagreements around what economic policies or models are most effective for an economy, and there’s unlikely to be any consensus between political parties the world over on this matter anytime soon. As such, macroeconomics should be viewed as one of the many tools that can be used to shape policy, but not the be all and end all in itself.
Macroeconomics has an impact on economic policies adopted by governments. (Source: CC BY-SA 3.0, Nick Youngson, Alpha Stock Images)
As we’ve seen above, macroeconomics is primarily concerned with the study of the economy as a whole, on an aggregated level.
As a distinct area of economics, macroeconomics is quite separate from other fields of economic studies, such as microeconomics, which is considered the “other side” to economics study. If you enjoy looking at the bigger picture and want to try and understand just how global and local economies operate the way they do, then you may find that you naturally gravitate to key areas of macroeconomic studies, such as:
Naturally, as macroeconomics is a significant area of economic study, it’s highly likely you’ll have to learn more about macroeconomic theories and policies, such as those described above, throughout your economics classes or lectures.
Regardless of whether you’re an A-level or university economics student, if you don’t enjoy studying macroeconomics then you may struggle at some point during your studies. This is because, for better or worse, macroeconomics features in almost every school curriculum and university degree course.
As such, if you know that you want to study economics at university, whether as a single or combined degree subject, but you just can’t get to grips with the basics of macroeconomics, then it may be time to reach out for a helping hand.
Although there are ways you can teach yourself about economic problems found in macroeconomics, many people find that an easier solution is to find an economics tutor to help you in your macroeconomics studies. In many ways, an economics tutor is a perfect way to help motivate you and help unlock the aspects that you find most appealing about macroeconomics.
Equally, even if you’re comfortable with macroeconomic areas, but would just like a tutor to give you some more question and exam practice, then there are plenty of economics tutors out there to help as well.
Superprof, for example, has a wide range of economics tutors who are very happy to help you with your studies, whether you would like local or online tuition. Simply enter in your postcode and the subject you’d like some help with, and you’ll be able to find your perfect tutor in no time!
Read about international economy here.