Macroeconomics

John Maynard Keynes published a book entitled ‘The General Theory of Employment, Interest, and Money’ in 1936. This book established the theoretical bases of modern macroeconomic analysis, often referred to as ‘Keynesian economics’.

As “macro” suggests, this is a level of analysis that looks at the performance of the economy as a Whole—the Big Picture—with particular attention to Business Cycles, Inflation, Unemployment and Economic Growth. Moreover, macroeconomics is designed to guide government demand management policies.

Macroeconomics is the branch of economics that deals with the relationships of large aggregates in order to analyze the performance of the national economy as a whole. The Keynesian approach emphasizes the need for sustaining levels of total or aggregate demand adequate for the full employment of productive capacity.

The policy tools of demand management are used to promote economic growth, reduce inflation and unemployment, control economic fluctuations (Business Cycles), and generally maintain a smoothly functioning economy.

Why should you, as a student of the twenty-first century, study macroeconomics?

There are three reasons which are as follows:

The first reason to study macroeconomics is to better understand the whole world in which we live - from the transformation of Eastern Europe, to high unemployment in Western Europe, to fast growth or crises in Asia, to the budget battles in the United States.

The second reason is to make us become more astute participants in the whole economy, for instance, how to manage the financial matters for a country.

The third reason is to gain a better understanding of the potential and limits of economic policies.

Thus, the principles of macroeconomics can be applied in many real life situations. Whether the future finds you reading the newspaper, or running a business, you will be glad that you studied macroeconomics.

John Maynard Keynes is considered one of the main founders of modern theoretical macroeconomics.