Dr M Manjunath Shettigar
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Microeconomics: the study of how
households and firms make decisions and
how they interact in markets
Macroeconomics: the study of economywide phenomena, including inflation,
unemployment, and economic growth
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Macroeconomics deals with the study of the
economy as a whole and its major
aggregates.
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By Macroeconomy we mean macroeconomic
conditions or environment within which
businesses have to function. Conditions and
quality of macroeconomic environment
matter a lot for businesses.
While a positive/favourable environment
contributes to business growth, business
expansion and faster economic growth, a
negative/unfavourable business environment
will have opposite effect.
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Macroeconomic environment depends on
factors such as:
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national output and income,
aggregate demand and supply,
the volume of savings and investment,
demand for and supply of money and other
financial assets,
the price level and changes in it
the rate of interest
fiscal and monetary policy
Economic growth and business cycles, and so on
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To
To
To
To
To
achieve sustained economic growth
maintain price stability
achieve/maintain full employment
promote distributive justice
maintain balance of payments equilibrium
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The main macroeconomic problems are
1. Business cycles
2. Inflation
3. Unemployment