What Is It?
Macroeconomics is the study of the behavior of
the economy as a whole. This is different from
microeconomics , which concentrates more on
individuals and how they make economic
decisions. Needless to say, macroeconomy is
very complicated and there are many factors
that influence it. These factors are analyzed with
various economic indicators that tell us about
the overall health of the economy.
Macroeconomists try to forecast economic
conditions to help consumers, firms and
governments make better decisions.
Consumers want to know how easy it will be
to find work, how much it will cost to buy
goods and services in the market, or how
much it may cost to borrow money.
Businesses use macroeconomic analysis to
determine whether expanding production will
be welcomed by the market. Will consumers
have enough money to buy the products, or
will the products sit on shelves and collect
Governments turn to the macroeconomy
when budgeting spending, creating taxes,
deciding on interest rates and making policy
Macroeconomic analysis broadly focuses on
three things: national output (measured by gross
domestic product (GDP)), unemployment and
inflation. (For background reading, see The
Importance Of Inflation And GDP.)