Essay: What is Macroeconomics

Sample Essay

Macroeconomics is one of the major branches of economics that is mainly concerned with the overall economic driving considerations namely decision making, behavior and the performance structure of the whole economy, either at a national, regional or even at global levels. (Heijdra & Ploeg 45). These parameters usually assist economists to comprehend the general trends of any given economy and thus they can come up with various policies whether to correct either budget or trade deficits.

As much as macroeconomics may seem to be wide, two branches stand out very conspicuously. The first branch tries to investigate the causes and repercussions of short run changes in national income whereas the second branch investigates the determinants of long-run growth of the economy (arise in national income) (Phillips 11). Generally, the two branches of economy elaborate on how issues such as inflation, trade deficits, savings, and consumption among others integrate and affect the economy.

Keynesian economics theory was formulated by john Maynard Keynes, a British economist who based his argument on the events of the 20th century in the cooperate world (Blinder 7). He argued that stands taken by then private sector might lead to poor or inefficient macroeconomic results. He therefore proposed active policy responses by the public sector, monetary policy actions by central banks and governments fiscal policy to stabilize the output over the business cycle (Blinder 11) This theory is more friendly to a mixed economy predominantly the private sector but flanked largely by the government and public sector.

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