What is macroeconomics

Macroeconomics is an extensive science that studies the large phenomena and processes of the economy of a whole country, such as budgeting, domestic and international trade, cash flow and pricing, etc.

Instruction manual

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Macroeconomics solves global economic problems as opposed to microeconomics. The objects of this science are not separate economic economies, but the economy of the whole country. Accordingly, the basic concepts of macroeconomics are such large quantities as gross domestic product, gross national product, national income, individual income (individual citizen), state budget, international debts, general price level, aggregate consumption and supply, unemployment rate, monetary circulation etc.

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All of these macroeconomic indicators are a system of national accounts. This system contains economic data that are used by government bodies to formulate economic policies.

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The main tools of macroeconomics are fiscal and monetary policy. Fiscal policy considers government spending on goods and services and net taxes. The object of fiscal policy is the state budget, so errors or inaccuracies in this area can lead to its imbalance or deficit.

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Monetary policy (monetary) is implemented by the Central Bank, which, depending on the growth rate of the mass of money in the country, raises or lowers the refinancing rate, restrains inflation, etc.

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Economic judgments distinguish between normative and positive macroeconomics. Normative macroeconomics operates with subjective judgments about how state economic policy should develop. For example, a normative judgment is a statement like “the poor should not pay taxes”.

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Positive macroeconomics is based on analytical conclusions on real economic facts and parameters. Positive judgments must necessarily be confirmed by statistical data.

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The macroeconomics always faces a number of problems, which are called the macroeconomic "magnificent seven": • Macroeconomic policy of the state; • Economic interaction with other countries; • Economic growth; • Economic cycles; • Growth in inflation; • Employment (unemployment rate); • National product.

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There are general and specific methods of macroeconomics. Common methods include induction and deduction, analogy, scientific abstraction, analysis and synthesis.

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Specific methods of macroeconomic theory: aggregation, modeling and the principle of equilibrium.