Definition: Macroeconomics is the branch of economics that studies the behavior and performance of an economy as a whole. It focuses on aggregate changes in the economy such as unemployment, growth rate, gross domestic product (GDP), and inflation. Scope of Macroeconomics: The scope of macroeconomics is wide and covers the major issues and problems of an economy:
Theory of National Income: It deals with the concepts of national income (GDP, GNP), its measurement, and the factors that determine it.
Theory of Employment: It studies the problems of unemployment and full employment in an economy. It analyzes the causes of unemployment and suggests policies to solve it.
Theory of Money: It examines the role of money in the economy and the functions of a central bank. It helps in understanding how the money supply affects the general price level.
Theory of General Price Level: It is concerned with the problem of inflation (rising prices) and deflation (falling prices), analyzing their causes and impact on the economy.
Theory of Economic Growth: It studies the factors and policies that lead to an increase in an economy's productive capacity and real national income over the long run.
Theory of International Trade: It analyzes the principles of trade between countries, the balance of payments, and the determination of foreign exchange rates.