Macroeconomics is the term that is frequently used in economics, it is that branch of economics that is concerned with the bigger picture that is the overall economy of the country as well as major policies and regulations so that economy can function properly and effectively. In order to understand more about this concept, one should look at some of the important features of macroeconomics –
Characteristics of Macroeconomics
Wider Scope
The first and foremost feature of macroeconomics is that it is much wider in scope in the sense that it takes into account aggregate factors like aggregate demand, aggregate supply as compared to microeconomics which focuses itself on individuals and micro factors. It can be better understood with the help of an example suppose in case of school the school authorities decide the exams dates and school session timings but when it comes to individual class the decision regarding the syllabus for the exam is left to class teachers, here exam dates and school session timings are like macroeconomic factors while work of individual class done by class teachers are microeconomic factors.
Focus on Investment and Spending
The focus of macroeconomics is more on increasing the investment as well as spending by the people of the country as compared to saving by individuals. In simple words, the government in the case of macroeconomics is more concerned about how to ensure that people spend more as well as the country receives more investment both from domestic investors as well as foreign investors as compared to microeconomics where individuals savings are given more importance as compared to increase in investment and spending.
Division of Economy into Sectors
In the case of macroeconomics, the whole economy is divided into different sectors so that it becomes easy for the government to formulate a strategy for different sectors that is the reason why you have different sectors in an economy like the telecom sector, real estate sector, manufacturing sector, agriculture sector, finance sector and so on. Division of economy into various sectors is particularly helpful when government prepares its budget for the overall economy as bifurcation of sectors helps the government to allocate funds to various sectors based on their requirements.
Key Problems are Addressed
Another important feature of macroeconomics is that it addresses the key problems of the economy whether it’s inflation, unemployment, fiscal deficits, monetary policy, improving per capita income of the country, and so on. In simple words, if your house or your locality or your whole city has an electricity problem then it is not a macroeconomic problem but if the whole nation is facing an electricity shortage then it is a macroeconomic problem as it affects the whole country.
Interrelated
In today’s world due to technology and globalization, everything in the world is interconnected with each other and that is the reason why macroeconomics has to take into account both these factors because any major happening around the world will have an impact on the economy of the country and macroeconomics has to be prepared to face the problems and provide the solution to the problem so that country’s economy continues to function properly. Hence for example the coronavirus pandemic which was believed to be originated in China made the whole world stop and all countries had to face economic and financial challenges due to this new problem which can be addressed by macroeconomics only and not microeconomics.
As one can see from the above that macroeconomics has some important characteristics which separate it from microeconomics and that is the reason why no economic study is complete without macroeconomics and anyone putting an argument against it should read the above characteristics.